UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 28, 2011
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-138148
AMERICAN PARAMOUNT GOLD CORP
(Exact name of registrant as specified in its charter)
Nevada 20-5243308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 King Street West, Suite 3670, Toronto, ON M5X 1A9
(Address of principal executive offices) (Zip Code)
|
Registrant's telephone number including area code: (416) 214-5640
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in |
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Number of common shares outstanding at April 8, 2011: 64,000,000
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An exploration Stage Company)
Index
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets at February 28, 2011 (unaudited) and August 31, 2010 audited 3
Statements of Operations for the three and six months ended February 28, 2011 and 2010, and for the period from inception (July 20, 2006) to February 28, 2011 (unaudited) 4
Statement of Stockholders' Equity (Deficit) for the period from inception (July 20, 2006) to February 28, 2011 (unaudited) 5
Statements of Cash Flows for the six months ended February 28, 2011 and 2010, and for the period from inception (July 20, 2006) to February 28, 2011 (unaudited) 6
Notes to Financial Statements (unaudited) 7
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Company)
Balance Sheets - Presented in U.S. Dollars
February 28, August 31,
2011 2010
------------ ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 1,192 $ 2,146
Other receivable 12,968 --
Prepaid and deposits 9,676 70,723
------------ ------------
Total current assets 23,836 72,869
Mineral claim 125,000 125,000
Website (net) 19,004 23,389
------------ ------------
TOTAL ASSETS $ 167,840 $ 221,258
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 143,815 $ 76,023
Accounts payable - related party -- 1,000
Notes payable 3,191 62,907
Convertible loans payable - related party, net of
unamortized discount of $4,649 and $10,791 as of
February 28, 2011 and August 31, 2010, respectively 676,948 240,142
------------ ------------
Total current liabilities 823,954 380,072
------------ ------------
TOTAL LIABILITIES 823,954 380,072
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock
150,000,000 authorized shares, par value $0.001
64,000,000 shares issued and outstanding 64,000 64,000
Additional paid-in capital 3,038,833 558,033
Deficit accumulated during the exploration stage (3,758,947) (780,847)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (656,114) (158,814)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 167,840 $ 221,258
============ ============
|
The accompanying notes are an integral part of these interim financial statements
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Company)
Statements of Operations - Presented in U.S. Dollars
(Unaudited)
From inception
For the Three Months For the Six Months (July 20, 2006) to
Ended February 28, Ended February 28, February 28,
2011 2010 2011 2010 2011
------------ ------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ -- $ --
OPERATING EXPENSES
Consulting expense -- -- 2,496,769 -- 3,033,999
Exploration expenses 94,695 -- 211,906 -- 229,406
General and administrative 57,911 727 83,694 1,460 126,936
Rent expenses - related party -- 1,500 -- 3,000 7,500
Management fees 37,869 -- 71,081 -- 71,081
Professional fees 37,757 9,879 79,495 12,879 220,081
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 228,232 12,106 2,942,945 17,339 3,689,003
OTHER EXPENSES
Amortization of debt discount 1,946 -- 6,142 -- 12,184
Interest expense 19,428 -- 29,013 -- 37,760
------------ ------------ ------------ ------------ ------------
21,374 -- 35,155 -- 49,944
------------ ------------ ------------ ------------ ------------
NET LOSS $ (249,606) $ (12,106) $ (2,978,100) $ (17,339) $ (3,738,947)
============ ============ ============ ============ ============
NET LOSS PER COMMON SHARE - BASIC $ (0.00) $ (0.00) $ (0.05) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING - BASIC 64,000,000 32,000,000 64,000,000 32,000,000
============ ============ ============ ============
|
The accompanying notes are an integral part of these interim financial statements
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Company)
Statement of Stockholders' Equity (Deficit) - Presented in US Dollars
(Unaudited)
Deficit
Accumulated
Common Stock Additional During the
------------------ Paid-in Exploration
Number Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, July 20, 2006 -- $ -- $ -- $ -- $ --
Issued for cash at $0.0005 per share
on July 26, 2006 40,000,000 40,000 -- (20,000) 20,000
Net loss -- -- -- (18,575) (18,575)
----------- ------- ---------- ----------- -----------
Balance, August 31, 2006 40,000,000 40,000 -- (38,575) 1,425
Issued for cash at $0.0025 per share
on December 20, 2006 24,000,000 24,000 36,000 -- 60,000
Net loss -- -- -- (15,058) (15,058)
----------- ------- ---------- ----------- -----------
Balance, August 31, 2007 64,000,000 64,000 36,000 (53,633) 46,367
Net loss -- -- -- (20,102) (20,102)
----------- ------- ---------- ----------- -----------
Balance, August 31, 2008 64,000,000 64,000 36,000 (73,735) 26,265
Net loss -- -- -- (17,820) (17,820)
----------- ------- ---------- ----------- -----------
Balance, August 31, 2009 64,000,000 64,000 36,000 (91,555) 8,445
Beneficial conversion feature -- -- 16,833 -- 16,833
Share-based compensation -- -- 505,200 -- 505,200
Net loss -- -- -- (689,292) (689,292)
----------- ------- ---------- ----------- -----------
Balance, August 31, 2010 64,000,000 64,000 558,033 (780,847) (158,814)
Share-based compensation -- -- 2,480,800 -- 2,480,800
Net loss -- -- -- (2,978,100) (2,978,100)
----------- ------- ---------- ----------- -----------
BALANCE, FEBRUARY 28, 2011 64,000,000 $64,000 $3,038,833 $(3,758,947) $ (656,114)
=========== ======= ========== =========== ===========
|
The accompanying notes are an integral part of these interim financial statements
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Company)
Statements of Cash Flows - Presented in US Dollars
(Unaudited)
From inception
For the Six Months (July 20, 2006) to
Ended February 28, February 28,
2011 2010 2011
------------ ------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss $ (2,978,100) $ (17,339) $ (3,738,947)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of website 4,385 -- 7,309
Stock issued for services 2,480,800 -- 2,986,000
Amortized debt discount 6,142 -- 12,184
Changes in operating assets and liabilities:
Decrease (increase) in prepaids and deposits 61,047 1,676 (9,676)
Increase in other receivable (12,968) -- (12,968)
Increase in accounts payable and accrued liabilities 67,792 8,163 143,815
(Decrease) increase accounts payable - related party (1,000) 1,500 --
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (371,902) (6,000) (612,283)
------------ ------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Mining claims -- -- (125,000)
Website -- -- (26,313)
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES -- -- (151,313)
------------ ------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Convertible loan proceeds - related party 430,664 -- 681,597
Notes payable proceeds 55,000 -- 117,907
Notes payable payments (114,716) -- (114,716)
Proceeds from sale of common stock -- -- 80,000
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 370,948 -- 764,788
------------ ------------ ------------
(DECREASE) INCREASE IN CASH (954) (6,000) 1,192
CASH, BEGINNING OF PERIOD 2,146 7,419 --
------------ ------------ ------------
CASH, END OF PERIOD $ 1,192 $ 1,419 $ 1,192
============ ============ ============
NON-CASH FINANCING ACTIVITIES
Beneficial conversion feature $ -- $ -- $ 16,833
============ ============ ============
|
The accompanying notes are an integral part of these interim financial statements
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
1. BASIS OF PRESENTATION AND GOING CONCERN
The accompanying financial statements of American Paramount Gold Corp.(formally known as Zebra Resources, Inc.) (the "Company") should be read in conjunction with the Company's most recent filing of the Form 10-K which included the financial statements as of August 31, 2010. Significant accounting policies disclosed therein have not changed except as noted below.
In the opinion of management, all adjustments necessary to present fairly the financial position as of February 28, 2011 and the results of operation, stockholders' equity (deficit) and cash flows presented herein have been included in the financial statements. All adjustments are of a normal recurring nature.
GOING CONCERN
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred a net loss of $2,978,100 and $17,339 for the six months ended February 28, 2011 and 2010. At February 28, 2011, the Company had a deficit accumulated during the exploration stage of $3,758,947. Since inception (July 20, 2006) to February 28, 2011, the Company has commenced limited operations, raising substantial doubt about the Company's ability to continue as a going concern. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.
2. DESCRIPTION OF THE BUSINESS AND HISTORY
American Paramount Gold Corp., a Nevada corporation, (hereinafter referred to as the "Company" or "APGC") was incorporated in the State of Nevada on July 20, 2006. The Company was formed to engage in the acquisition, exploration and development of natural resource properties of merit. The Company acquired a mineral claims option located in the Province of British Columbia, Canada during the period ending August 31, 2006 for $15,000. The Company entered into a Mineral Property Options Agreement (the "MPOA") with a private British Columbia company, whereby the Company obtained an option to acquire mineral claims known as "Astro 2006" located in British Columbia. During the period ending August 31, 2009, the Company terminated the MPOA and relieved itself from any further obligations there under.
On April 14, 2010, we entered into a consulting agreement with Wayne Parsons whereby Mr. Parsons agreed to provide our Company with various consulting services as the president, chief executive officer, chief financial officer, secretary and treasurer. In consideration of his services, we agreed to provide Mr. Parsons with a monthly payment of CDN$1,500 and a one time grant of 1,000,000 non transferable options to acquire one share of our common stock at a purchase price of US$1.00 per share, exercisable for five (5) years. These options were cancelled and re-issued on October 6, 2010 with a purchase price of $0.68 as part of the below described issuance under our 2010 Stock Plan. Under ASC (718) this concurrent cancellation and reissuance of options was accounted for as a modification. Accordingly, the Company compared the fair value of the options cancelled to the fair value of the options reissued on October 6, 2010. In connection with this modification the Company recorded stock-based compensation of $276,000.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
2. DESCRIPTION OF THE BUSINESS AND HISTORY
On August 30, 2010, Wayne Parsons resigned as secretary and treasurer of the Company. On September 29, 2010 Mr. Parsons resigned as president, chief financial officer and chief executive officer of the Company. Concurrently on September 29, 2010, the consulting agreement dated April 14, 2010 between Mr. Parsons and the Company was terminated. In connection with the termination of the consulting agreement the Company agreed to cancel 1,000,000 fully vested stock options with an exercise price of $1.00 that were issued to Mr. Parsons on April 14, 2010 as compensation under the consulting agreement, and to issue to Mr. Parsons 1,000,000 fully vested stock options under the 2010 Stock Plan. The 1,000,000 options under the 2010 Stock Plan were issued on October 6, 2010 and are exercisable at a price of $0.68 until October 6, 2015. The 1,000,000 options issued on April 14, 2010 were cancelled effective November 18, 2010.
On September 7, 2010, and October 13, 2010 Monaco Capital Inc. advanced $100,000 and $50,000 respectively. The total advanced under the Convertible Loan is $400,933.
On September 27, 2010, Peter Jenks and John Goodwin each resigned as members of our board of directors. Mr. Jenks' and Mr. Goodwin's resignations were not the result of any disagreements regarding our operations, policies, practices or other disagreements.
Since September 27, 2010, our board of directors has consisted of 5 directors including J. Trevor Eyton, Wayne Parsons, Hugh Aird, Dr. H. Neville Rhoden, and Leland Verner.
On September 29, 2010, Wayne Parsons resigned as our president, chief executive officer and chief financial officer. Mr. Parsons' resignation was not the result of any disagreements regarding the Company's operations, policies, practices or other disagreements and he remains a member of our board of directors. As a result on September 29, 2010, we appointed Hugh Aird as our president and chief executive officer and Ann Dumyn as our chief financial officer.
On October 6, 2010, we granted an aggregate of 5,400,000 stock options to ten individuals, including directors, officers, consultants and employees, pursuant to our 2010 Stock Plan, at an exercise price of $0.68 per share. Of the 5,400,000 stock options, 400,000 options are exercisable until October 5, 2012 and 5,000,000 options are exercisable until October 6, 2015. We issued the stock options to seven (7) non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 and to three (3) U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) relying upon Rule 506 of Regulation D of the Securities Act of 1933.
On December 6, 2010 Monaco Capital Inc. advanced $100,000. The total advanced under the Convertible Loan is $500,933.
On December 9, 2010 the Company, having performed the due diligence required to acquire the Kisita Gold Mine Property, advised Lonsdale Acquisition Corporation that it declined to proceed with the purchase agreement under its current terms and conditions.
On December 16, 2010 Leland Verner resigned as a member of our board of directors. Mr. Verner's resignation was not the result of any disagreements regarding our operations, policies, practices or other disagreements.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
2. DESCRIPTION OF THE BUSINESS AND HISTORY (CONTINUED)
On December 17, 2010 the Company entered into a Convertible Loan agreement with Monaco Capital Inc., majority shareholder, for a principal amount of up to $5,000,000 for a term of one year. The convertible loan agreement replaced the original agreement with Monaco Capital Inc., dated April 22, 2010 and provided that the principal of $500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to and including December 17, 2010, be treated as if issued under the terms of the new agreement. The loan is unsecured and shall bear interest at the rate of 10% per annum payable on the due date. The Company may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding at any time for an additional 10% of such amount. The loan (including accrued interest) is convertible into securities of the Company at a conversion price calculated as the mean volume weighted average price for the Company's common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. At any time after the advancement date, if the Company has not paid the loan and accrued interest in full, the Lender may, by providing written notice to the Company, exercise its rights of conversion in respect of either a portion of the total outstanding amount of the loan as of that date into shares of the Company.
On December 29, 2010, Monaco Capital Inc. advanced $100,000. The total advanced under the Convertible Loan is $621,596.
On February 15, 2011, Monaco Capital Inc. advanced $60,000. The total advanced under the Convertible Loan is $681,596.
The Company is an exploration stage enterprise, as defined in FASB ASC 915-10 "Development Stage Entities". As an exploration stage mining company we are engaged in the identification, acquisition, and exploration of metals and minerals with a focus on gold mineralization. Our current operational focus is to conduct exploration activities on the Cap Gold Project and to complete the terms of the Cap Gold option agreement (Note 4 Mineral Properties).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash consists of all highly liquid financial instruments purchased with an
original maturity of three months or less.
FAIR VALUE OF FINANCIAL INSTRUMENTS
FASB ASC 825 "Financial Instruments", requires the Company to disclose, when
reasonably attainable, the fair market value of its assets and liabilities which
are deemed to be financial instruments. The fair value represents management's
best estimates based on a range of methodologies and assumptions. The carrying
value of receivables and payables arising in the ordinary course of business and
the receivable from taxing authorities, approximate fair value because of the
relatively short period of time between their origination and expected
realization.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company accounts for its income taxes in accordance with FASB ASC 740
"Income Taxes", which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax basis and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date. The Company has a net operating loss carry-forward to be used in
future years. The Company has established a valuation allowance for the full tax
benefit of the operating loss carry-forwards due to the uncertainty regarding
realization.
NET LOSS PER COMMON SHARE
The Company computes net loss per share in accordance with FASB ASC 260
"Earnings per Share". Under the provisions of FASB ASC 260 "Earnings per Share",
basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive. For the period from
Inception (July 20, 2006) through February 28, 2011, common stock equivalents
are the rights conferred upon Monaco Capital Inc. pursuant to the convertible
loan agreement (Note 6) and those arising from the 2010 Stock Option Plan (Note
8). These stock equivalents were not included as their effect was anti-dilutive
for the periods presented.
STOCK-BASED COMPENSATION
On August 1, 2009, the Company adopted the fair value recognition provisions of
FASB ASC 718-10 and 505-10. The Company accounts for equity instruments issued
in exchange for the receipt of goods or services from other than employees in
accordance with FASB ASC 505-10. Costs are measured at the estimated fair market
value of the consideration received or the estimated fair value of the equity
instruments issued, whichever is more reliably measurable. The value of equity
instruments issued for consideration other than employee services is determined
on the earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by FASB ASC 505-10.
The Company records stock-based compensation in accordance with the guidance in ASC 718. ASC Topic 718 requires the Company to recognize expense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share based awards on a graded vesting basis over the vesting period of the award.
CONCENTRATION OF CREDIT RISK
The Company places its cash and cash equivalents with high credit quality
financial institutions. The Company obtained financing during the period from
Monaco Capital Inc. which holds 52% of the Company's common shares. The balance
of the loan as at February 28, 2011 was $676,948, net of debt discount.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MINERAL PROPERTY COSTS
The Company has been in the exploration stage since its formation July 20, 2006
and has not yet realized any revenues from its planned operations. It is
primarily engaged in the acquisition and exploration of mining properties.
Mineral property acquisitions are capitalized and exploration costs are charged
to operations as incurred. When it has been determined that a mineral property
can be economically developed as a result of establishing proven and probable
reserves, the costs incurred to develop such property, are capitalized. Such
costs will be depleted using the units-of-production method over the estimated
life of the probable reserve.
Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
4. MINERAL PROPERTIES AND WEBSITE DEVELOPMENT
On April 16, 2010, the Company entered into an option agreement to acquire a 100% long-term lease interest in 189 unpatented mining claims situated in the Walker Lane Structural Belt in Nye County, Nevada (the "Cap Gold Project"). The 189 claims making up the Cap Gold Project form a contiguous block of approximately 3,960 acres (1,602 hectares). The Company paid $125,000 to secure the option, giving it the right to acquire a 100% long-term lease interest in the Cap Gold Project. To exercise the option the Company must: (i) make ongoing yearly advance production royalty cash payments during the term of the agreement of $125,000 in years two (2) through five (5), $150,000 in years six (6) through twelve (12), $200,000 in years 13 through 20 and $300,000 in years 21 through 30; (ii) incur expenditures on exploration of the Cap Gold Project of not less than an aggregate of $1,250,000 over five (5) years; and (iii) make production royalty payments from production from the property after the advance production royalty cash payments described above have been repaid to our Company from production from the property. At our Company's election, the production royalty may be calculated either on a sliding scale or on a fixed production royalty basis, and must range from 1% to a maximum of 3%.
On November 8, 2010, we entered into a letter of intent with Lonsdale Acquisitions Corp. to acquire the Kisita Gold Mine Property, an operational gold property four hours northwest of the capital city of Kampala in Uganda. The Company has commenced onsite and corporate due diligence.
On December 9, 2010 the Company, having performed the due diligence required to acquire the Kisita Gold Mine Property, advised Lonsdale Acquisition Corporation that it declined to proceed with the purchase agreement under its current terms and conditions.
The Company capitalizes the costs associated with the development of the Company's website pursuant to ASC Topic 350. Other costs related to the maintenance of the website are expensed as incurred. Amortization is provided over the estimated useful life of 3 years using the straight-line method for financial statement purposes. The Company capitalized $26,313 in Website development in the 2010 fiscal year. The net book value at February 28, 2011 was $19,004.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
5. NOTES PAYABLE
Effective June 1, 2010 the Company obtained liability insurance for its directors and entered into a unsecured commercial premium finance agreement - promissory note for $30,720 due in ten equal instalments with a finance charge of $1,187. At February 28, 2011 the balance owing AFCO was $3,191.
On August 27, 2010 the Company obtained a loan from an individual in the principal amount of $32,077. Due to its short-term nature the Company agreed to pay the individual $6,493 as a premium. The note payable totalling $38,570 was due and payable on or before September 15, 2010. The note was paid in full on September 10, 2010.
On November 26, 2010, the Company obtained a demand promissory note from Taio Investments Ltd. ("Taio") of CDN$50,000 ($49,518 US). Due to its short term nature the Company agreed to pay Taio $5,000 as a premium. The note payable totalling $55,000 was due and payable on December 6, 2010. The note was paid in full on December 6, 2010.
6. CONVERTIBLE LOAN - RELATED PARTY
On April 22, 2010, the Company entered into a convertible loan agreement with Monaco Capital Inc., majority shareholder, for a principal amount of up to $500,000 for a term of one year from any applicable advancement date. The loan is unsecured and shall bear interest at the rate of 10% per annum payable on the due date. The Company may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding at any time for an additional 10% of such amount.
The loan (including accrued interest) is convertible into securities of the Company at a conversion price of $1.05 per share. At any time after the advancement date, if the Company has not paid the loan and accrued interest in full, the Lender may, by providing written notice to the Company, exercise its rights of conversion in respect of either a portion of the total outstanding amount of the loan as of that date into shares of the Company. At December 17, 2010, Monaco Capital Inc has advanced to the Company $500,933.
On December 17, 2010 the Company entered into a new convertible loan agreement with Monaco Capital Inc., majority shareholder, for a principal amount of up to $5,000,000 for a term of one year. The convertible loan agreement replaced the original agreement with Monaco Capital Inc., dated April 22, 2010 and provided that the principal of $500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to and including December 17, 2010, be treated as if issued under the terms of the new agreement. The loan is unsecured and shall bear interest at the rate of 10% per annum payable on the due date. The Company may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding at any time for an additional 10% of such amount. The loan (including accrued interest) is convertible into securities of the Company at a conversion price calculated as the mean volume weighted average price for the Company's common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. At any time after the advancement date, if the Company has not paid the loan and accrued interest in full, the Lender may, by providing written notice to the Company, exercise its rights of conversion in respect of either a portion of the total outstanding amount of the loan as of that date into shares of the Company.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
6. CONVERTIBLE LOAN - RELATED PARTY (CONTINUED)
The balance sheets at February 28, 2011 and August 31, 2010 recorded the loan value at $676,948 and $240,142 due to the unamortized beneficial conversion feature on the convertible debt totalling $4,649 and $10,791. The initial beneficial conversion feature was valued at $16,833 of which $12,184 has been amortized. The beneficial conversion feature amount has been accounted for as a debt discount which is being amortized and treated as interest expense over the term of the new convertible loan. Accrued interest at February 28, 2011 and August 31, 2010 relating to the loan totalling $12,095 and $8,746, respectively was recorded in accounts payable and accrued liabilities.
7. STOCKHOLDERS' EQUITY (DEFICIT)
The Company has 150,000,000 (75,000,000 pre-forward stock split) shares authorized with a par value of $0.001 per share.
Effective July 25, 2006, the Company issued 40,000,000 (20,000,000 pre-forward stock split) to the founding and sole director of the Company pursuant to a stock subscription agreement at $0.0005 per share for total proceeds of $20,000, the shares were issued below par thus $20,000 was applied to accumulated deficit.
Effective December 20, 2006, the Company issued 24,000,000 (12,000,000 pre-forward stock split) shares of the Company's common stock pursuant to the Company's SB-2 prospectus offering at $0.0025 per share for total proceeds of $60,000.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in the Company by purchasing 40,000,000 (20,000,000 pre-forward stock split) shares of our common stock in a private transaction.
On March 17, 2010, the Company filed a Plan of Merger, Merger Agreement and Certificate of Change with the Nevada Secretary of State to affect a forward stock split of its common shares on a 2 new for 1 old basis. The change was approved by FINRA effective April 12, 2010. As a result, our authorized capital increased from 75,000,000 to 150,000,000 shares of common stock and our issued and outstanding increased from 32,000,000 shares of common stock to 64,000,000 shares of common stock, all with a par value of $0.001. All references in these financial statements and notes to the financial statements to the number of shares, price per share and weighted average number of shares outstanding of common stock prior to this stock split have been adjusted to reflect the stock split on a retroactive basis unless otherwise noted.
On April 22, 2010, the Company entered into a convertible loan agreement with Monaco Capital Inc., a majority shareholder, resulting in a beneficial conversion feature valued at $16,833 which was applied to additional paid in capital.
8. STOCK OPTIONS
On April 14, 2010, the Company entered into a consulting agreement with Wayne Parsons, to act as President, CEO, CFO, Secretary and Treasurer of the Company. As part of the compensation package he was granted 1,000,000 fully vested, non transferable stock options with an exercise price of $1.00. These options were cancelled and re issued on October 6, 2010 with a purchase price of $0.68 under our 2010 Stock Plan. Under ASC(718) this concurrent cancellation and reissuance of options was accounted for as a modification. Accordingly, the Company compared the fair value of the options cancelled to the fair value of the options reissued on October 6, 2010. In connection with this modification the Company recorded stock-based compensation of $276,000.
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
(An Exploration Stage Entity)
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
8. STOCK OPTIONS (CONTINUED)
Under ASC 718 and 505, the fair value of options is estimated at the date of grant using a Black-Scholes-Merton ("Black-Scholes") option-pricing model, which requires the input of highly subjective assumptions including the expected stock price volatility. Volatility is determined using historical stock prices over a period consistent with the expected term of the option. The Company utilizes the guidelines of staff Accounting Bulletin No. 107 (SAB 107) of the Securities and Exchange Commission relative to "plain vanilla" options in determining the expected term of option grants. SAB 107 permits the expected term of "plain vanilla" options to be calculated as the average of the options's vesting term and contractual period.
The fair value of the options using the Black-Scholes option pricing model with the following assumptions was recorded in the statement of operations as consulting expenses at a value of $505,200:
Risk Free Interest Rate 1.07% Expected life 913 days Expected volatility 72% Dividend per share $Nil |
On July 30, 2010, the Company adopted the 2010 Stock Option Plan which permits the Company to issue up to 6,500,000 shares of common stock to directors, officers, employees and consultants of the Company upon the exercise of stock options granted under the 2010 Plan. At the time of the grant of the option, the Plan Administrator shall designate the expiration date of the option, which date shall not be later than five (5) years from the date of grant. The vesting schedule for each option shall be specified by the Plan Administrator at the time of grant of the Option. Effective September 29, 2010 the Plan provides for an exercise price to be established based on the Fair Market Value of a common share of the Company being the average of the high and low sales prices (or bid and ask prices, if sales prices are not reported) for the common stock for the last trading day immediately preceding the date with respect to which Fair Market Value is being determined, as reported for the principal trading market for the Common Stock.
On October 6, 2010, an aggregate of 5,400,000 stock options was granted to ten individuals, including directors, officers, consultants and employees, pursuant to our 2010 Stock Plan, at an exercise price of $0.68 per share. Included in the 5,400,000 stock options granted was 1,000,000 re-issued to Wayne Parsons as discussed in Note 8. Of the 5,400,000 stock options, 400,000 options are exercisable until October 5, 2012 and 5,000,000 options are exercisable until October 6, 2015. These stock options all vest immediately.
The fair value of the 5,400,000 options using the Black-Scholes option pricing model with the following assumptions was recorded in the statement of operations as consulting expenses at a value of $2,480,800:
Risk Free Interest Rate 0.38% and 1.16% respectively
Expected life 730 days and 1825 days respectively
Expected volatility 85.4%
Dividend per share $Nil
14
|
American Paramount Gold Corp. (fka Zebra Resources Inc.) (An Exploration Stage Entity) |
Notes to Financial Statements - Presented in US Dollars
Three and Six Months Ended February 28, 2011
(Unaudited)
8. STOCK OPTIONS (CONTINUED)
A summary of the status of the Company's stock option plan as of February 28, 2011 and changes during the six months is presented below:
Number of Weighted Average
Stock Options Exercise Price ($)
------------- ------------------
BALANCE, AUGUST 31, 2010 1,000,000 1.00
Granted 5,400,000 0.68
Cancelled (1,000,000) (1.00)
---------- ------
BALANCE, FEBRUARY 28, 2011 5,400,000 0.68
========== ======
|
9. SUBSEQUENT EVENT
On March 1, 2011, we entered into a consulting agreement with Illyria Inc., (whose executive, Leland Verner, is a former director of the Company) to provide strategic planning and business development services to the Company. The agreement has a term ending December 31, 2012 and a fee of $120,000 per annum with eligibility for additional compensation in the form of warrants or options at the discretion of the Company.
On March 1, 2011, we entered into a consulting agreement with Wayne Parsons, a director of the Company, to provide strategic planning and business development services to the Company. The agreement has a term ending December 31, 2012 and a fee of $60,000 per annum with eligibility for additional compensation in the form of warrants or options at the discretion of the Company.
On March 2, 2011, we approved a Private Placement Offering (the "Offering") to
sell up to a maximum of 40,000,000 units ("Units") of the Company's securities
at $0.10 per Unit, each Unit consisting of one common share (a "Share") and
one-half of one common share purchase warrant (each whole warrant a "Warrant")
entitling the holder to subscribe for one Share at a price of $0.15 per Share
for a period of 18 months from closing. The Offering was made pursuant to
Section 4(2) of the Securities Act of 1933 and applicable exemptions in other
jurisdictions to Accredited Investors.
On March 2, 2011, we cancelled 5,400,000 stock options previously granted on October 6, 2010 to various directors, officers, and consultants of the Company pursuant to our 2010 Stock Plan. The cancelled options constituted all of the active stock options of the Company as at the cancellation date and were variably exercisable for a term of 2 or 5 years at an exercise price of $0.68 per share. The cancellations were made in accordance with cancellation agreements between the Company and the respective option holders.
On March 2, 2011, we granted 5,150,000 stock options to the officers, directors, and consultants of the Company in accordance with our 2010 Stock Plan, at an exercise price of $0.12 per share. Of the 5,150,000 stock options, 150,000 options are exercisable until March 2, 2013 and 5,000,000 options are exercisable until March 2, 2016. These stock options all vest immediately.
On March 28, 2011 an Accredited Investor purchased 2,500,000 Units of the Company's securities under the Private Placement Offering for net proceeds of $250,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our company's audited financial statements and 10-K for the year ended August 31, 2010 and unaudited interim financial statements and the related notes that appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all references to "common stock" refer to common shares in the capital of our company and the terms "we", "us", "our" and "our company" mean American Paramount Gold Corp.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on July 20, 2006 under the name Zebra Resources Incorporated (aka "Zebra Resources, Inc.") At inception, we were an exploration stage company engaged in the acquisition, exploration and development of mineral properties.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in our company by purchasing 20,000,000 shares of our common stock in a private transaction.
On March 17, 2010, we effected a 1 old for 2 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 75,000,000 to 150,000,000 shares of common stock and our issued and outstanding increased from 32,000,000 shares of common stock to 64,000,000 shares of common stock, all with a par value of $0.001.
Also effective March 17, 2010, we changed our name from Zebra Resources Incorporated to American Paramount Gold Corp., by way of a merger with our wholly owned subsidiary American Paramount Gold Corp., which was formed solely for the change of name.
The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on April 12, 2010 under the stock symbol APGA. Our CUSIP number is 02882T 05.
On April 16, 2010, we entered into an agreement with Royce L. Hackworth and Belva L. Tomany in respect of an option to acquire 189 unpatented mining claims situated in the Walker Lane Structural Belt in Nye County, Nevada known as the Capgold Project. The 189 claims making up the Capgold Project form a contiguous block of approximately 3,960 acres (1,602 hectares). We paid $125,000 to secure the option, giving us the right acquire a 100% long-term lease interest in the Capgold Project. To exercise the option we must: (i) make ongoing yearly advance production royalty cash payments during the term of the agreement of $125,000 in years 2 through 5, $150,000 in years 6 through 12, $200,000 in years 13 through 20 and $300,000 in years 21 through 30; (ii) incur expenditures on exploration of the Capgold Project of not less than an aggregate of $1,250,000 over 5 years; and (iii) make production royalty payments from production from the property after the advance production royalty cash payments described above have been
repaid to our company from production from the property. At our company's election, the production royalty may be calculated either on a sliding scale or on a fixed production royalty basis, and must range from 1% to a maximum of 3%.
On April 22, 2010, we entered into a convertible loan agreement with Monaco Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to $500,000. The loan (and accrued interest) is convertible in whole or in part into common shares of our company at a conversion price of $1.05 and will bear interest at 10% per annum. The principal amount of the loan and accrued interest is due and payable one year from the advancement date. We may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding for an additional 10% of such amount. At December 17, 2010, Monaco Capital Inc. has advanced to the Company $500,933.
On July 30, 2010, our directors approved the adoption of the 2010 stock option plan which permits our company to issue up to 6,500,000 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2010 plan.
On July 28, 2010, we obtained an extra-provincial license to carry on business in the Province of Ontario, Canada. Our Ontario corporation number is 1827852.
On November 9, 2010, we entered into a non-binding letter of intent to acquire the Kisita Gold Mine Property, an operational gold property four hours northwest of the capital city of Kampala, Uganda. The acquisition was subject to further negotiation and due diligence of the project satisfactory to us. On December 9, 2010 our company, having performed the due diligence required to acquire the Kisita Gold Mine Property, advised Lonsdale Acquisition Corporation that we declined to proceed with the purchase agreement under its current terms and conditions. Discussions with Lonsdale Acquisition Corporation are ongoing.
On December 17, 2010, we entered into a new convertible loan agreement with Monaco Capital Inc. which replaces the original convertible loan agreement entered into on April 22, 2010 in its entirety and provides that the principal of $500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to and including December 17, 2010, be treated as if issued under the terms of the new agreement. Under the December 17, 2010 convertible loan agreement, Monaco Capital has agreed to loan our company up to $5,000,000. The loan bears interest at a rate of 10% per annum and is convertible (including accrued interest) into securities of our company at a conversion price calculated as the mean volume weighted average price for our company's common stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal amount of the loan and accrued interest is due and payable one year from the effective date. We may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding for an additional 10% of such amount. At February 28, 2011, Monaco Capital Inc. has advanced $681,597. The balance sheet at February 28, 2011 records the loan value at $676,948 due to the unamortized beneficial conversion feature on the convertible debt totalling $4,649. The beneficial conversion feature amount has been accounted for as a debt discount which is being amortized and treated as interest expense over the term of the new convertible loan. Accrued interest relating to the loan totalling $12,095 as at February 28, 2011 was recorded in accounts payable and accrued liabilities.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a focus on gold mineralization on our property located in Nevada.
Since we are an exploration stage company, there is no assurance that a commercially viable mineral reserve exists on any of our current or future properties, To date, we do not know if an economically viable mineral reserve exists on our property and there is no assurance that we will discover one. Even if we do eventually discover a mineral reserve on our property, there can be no assurance that we will be able to develop our property into a producing mine and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
Our current operational focus is to conduct exploration activities on the Capgold Project and to complete the terms of the Capgold option agreement.
CASH REQUIREMENTS
We intend to conduct exploration activities on our Capgold Project property over the next twelve months. We estimate our operating expenses and working capital requirements for the next twelve month period to be as follows:
ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTH PERIOD
General, administrative, and corporate expenses $ 400,000
Operating expenses $ 200,000
Exploration $2,500,000
----------
TOTAL $3,100,000
==========
|
At present, our cash requirements for the next 12 months outweigh the funds available to maintain or develop our properties. Of the $3,100,000, that we require for the next 12 months, we had $1,192 in cash as of February 28, 2011. In order to improve our liquidity, we intend to pursue additional equity financing from private investors or possibly a registered public offering. Other than as set out below, we currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.
On April 22, 2010, we entered into a convertible loan agreement with Monaco Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to $500,000. The loan is convertible into common shares of our company at a conversion price of $1.05. On December 6, 2010 Monaco Capital Inc. advanced $100,000. To date, $500,933 has been advanced under the April 2010 loan agreement.
On December 17, 2010 our company entered into a convertible loan agreement with Monaco Capital Inc., majority shareholder, for a principal amount of up to $5,000,000 for a term of one year. The convertible loan agreement replaced the original agreement with Monaco Capital Inc., dated April 22, 2010 and provided that the principal of $500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to and including December 17, 2010, be treated as if issued under the terms of the new agreement. The loan is unsecured and shall bear interest at the rate of 10% per annum payable on the due date. Our company may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding at any time for an additional 10% of such amount. The loan (including accrued interest) is convertible into securities of our company at a conversion price calculated as the mean volume weighted average price for our company's common stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. At any time after the advancement date, if our company has not paid the loan and accrued interest in full, the lender may, by providing written notice to our company, exercise its rights of conversion in respect of either a portion of the total outstanding amount of the loan as of that date into shares of our company.
On December 29, 2010 Monaco Capital Inc. advanced $100,000. The total advanced under the convertible loan is $621,596.
On February 15, 2011 Monaco Capital Inc. advanced $60,000. The total advanced under the convertible loan is $681,596.
RESULTS OF OPERATIONS - THREE MONTHS ENDED FEBRUARY 28, 2011 AND 2010
The following summary of our results of operations should be read in conjunction with our financial statements for the three month period ended February 28, 2011 and 2010 which are included herein.
Our operating results for the three months ended February 28, 2011, for the three months ended February 28, 2010 and the changes between those periods for the respective items are summarized as follows:
Change Between
Three Month
Period Ended
Three Months Three Months February 28, 2011
Ended Ended and
February 28, February 28, February 28,
2011 2010 2010
-------- -------- --------
($) ($) ($)
Revenue Nil Nil Nil
Consulting expenses Nil Nil Nil
Exploration expenses (94,695) Nil (94,695)
General and administrative (57,911) (727) (57,184)
Rent expenses - related party Nil (1,500) 1,500
Management fees (37,869) Nil (37,869)
Professional fees (37,757) (9,879) (27,878)
-------- -------- --------
Net loss from operations (228,232) (12,106) (216,126)
======== ======== ========
|
REVENUES
We have not generated revenues since inception and we do not anticipate earning revenues in the near future.
EXPLORATION EXPENSES
Exploration expenses increased by $94,695 during the three months ended February 28, 2011 as compared to the three months ended February 28, 2010 due to our work on the Capgold Project for $63,695 and the Kisita Project for $31,000.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $57,184 during the three months ended February 28, 2011 as compared to the three months ended February 28, 2010 due to amortization of $2,193, insurance costs of $9,675, travel expenses of $13,767 and other office expenses of $19,317.
RENT EXPENSES
Rent expenses decreased by $1,500 during the three months ended February 28, 2011 as compared to the three months ended February 28, 2010 as a result of termination of the rental agreement.
MANAGEMENT FEES
Management fees increased by $39,869 during the three months ended February 28, 2011 as compared to the three months ended February 28, 2010 as a result of the payment for services of the president of $22,718 and the secretary/treasurer of $15,150, commencing October 1, 2009 and September 1, 2009 respectively.
PROFESSIONAL FEES
Professional fees increased by $27,878 during the three months ended February 28, 2011 compared to the three months ended February 28, 2010 due to an increase in administration and accounting services of $9,567, legal fees of $21,689 and audit fees of $6,500.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
February 28, August 31,
2011 2010
---------- ----------
Current assets $ 23,836 $ 72,869
Current liabilities 823,954 380,072
Working capital (deficit) $ (800,118) $ (307,203)
|
CASH FLOWS
Six Months Ended February 28,
2011 2010
---------- ----------
Cash flows provided by (used in) operating activities $ (371,902) $ (6,000)
Cash flows provided by (used in) investing activities Nil Nil
Cash flows provided by (used in) financing activities 370,948 Nil
---------- ----------
Increase (decrease) in cash and cash equivalents $ (954) $ (6,000)
========== ==========
|
OPERATING ACTIVITIES
Net cash used by operating activities was $371,902 for the six months ended February 28, 2011 compared with cash used by operating activities of $6,000 in the same period in 2010. The difference was largely due to an overall increase in cash expenditures and an increase in accounts payable and accrued liabilities.
INVESTING ACTIVITIES
Net cash used in investing activities was $Nil for the six months ended February 28, 2011 compared to net cash used in investing activities of $Nil in the same period in 2010.
FINANCING ACTIVITIES
Net cash from financing activities for the six months ended February 28, 2011 was $370,948 and for the six months ended February 28, 2010 was $Nil. During the six months ended February 28, 2011, Monaco Capital Inc. advanced our company $410,000 pursuant to a convertible loan agreement.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular disclosure obligations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
STOCK-BASED COMPENSATION
On August 1, 2009, our company adopted the fair value recognition provisions of FASB ASC 718-10 and 505-10. Our company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 505-10. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined
on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-10.
Our company records stock-based compensation in accordance with the guidance in ASC 718. ASC Topic 718 requires our company to recognize expense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. Our company recognizes the cost of all share based awards on a graded vesting basis over the vesting period of the award.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
MINERAL PROPERTY COSTS
Our company has been in the exploration stage since its formation July 20, 2006 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property acquisitions are capitalized and exploration costs are charged to operations as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be depleted using the units-of-production method over the estimated life of the probable reserve.
Although our company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee our company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
GOING CONCERN
Our company has incurred a net loss $249,606 for the three month period ended February 28, 2011 [2010 - $12,106] and at February 28, 2011 had a deficit accumulated during the development stage of $3,758,947. Since inception (July 20, 2006) to February 28, 2011, our company has commenced limited operations, raising substantial doubt about our company's ability to continue as a going concern. Our company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance our company will be successful in accomplishing its objectives.
The ability of our company to continue as a going concern is dependent on additional sources of capital and the success of our company's plan. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.
At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors, shareholders or investors to meet our obligations over the next twelve months. Other than a convertible loan agreement with Monaco Capital Inc., we do not have any further arrangements in place for any future debt. On March 2, 2011 we approved a private placement offering to sell up to a maximum of 40,000,000 units of our company's securities at $0.10 per unit, each unit consisting of one common share and one-half of one common share purchase warrant entitling the holder to subscribe for one share at a price of $0.15 per share for a period of 18 months from closing.
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our chief financial officer (also our principal financial officer and principal accounting officer), to allow for timely decisions regarding required disclosure.
As of February 28, 2011, the end the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer) and our chief financial officer (also our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (also our principal executive officer) and our chief financial officer (also our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were effective in providing reasonable assurance in the reliability of our financial reports as of the end of the period covered by this quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward-looking statements". Such forward-looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Such estimates, projections or other "forward-looking statements" involve various risks and uncertainties as outlined below. We caution readers of this quarterly report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward-looking statements". In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.
RISKS ASSOCIATED WITH MINING
OUR PROPERTY IS IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON OUR PROPERTY IN COMMERCIALLY EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral property, we have not established that it contains any mineral reserve, nor can there be any assurance that we will be able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a "reserve" that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any "reserve" and any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on our property, there can be no assurance that we will be able to develop our property into a producing mine and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON OUR PROPERTY, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance. Current laws and regulations could be amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON OUR PROPERTY IN A COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on our property, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS. WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral resource property or from the extraction and sale of ore. The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of mineral products. Therefore, we will likely be able to sell any mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.
RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to identify a mineral resource in a commercially exploitable quantity on our mineral property and we build and operate a mine. We had cash in the amount of $1,192 as of February 28, 2011. At February 28, 2011, we had working capital deficit of $800,118. We incurred a net loss of $249,606 for the three month period ended February 28, 2011 and $3,738,947 since inception. We estimate our average monthly operating expenses to be approximately $150,000, including mineral property costs, management services and administrative costs. Should the results of our planned exploration require us to increase our current operating budget, we may have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months. As we cannot assure a lender that we will be able to successfully explore and develop our mineral property, we will probably find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity securities, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue exploration of our mineral property, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these were to occur, there is a substantial risk that our business would fail.
These circumstances lead our independent registered public accounting firm, in their report dated November 29, 2009, to comment about our company's ability to continue as a going concern. Management has plans to seek additional capital through a private placement of its capital stock. These conditions raise substantial doubt about our company's ability to continue as a going concern. Although there are no assurances that management's plans will be realized, management believes that our company will be able to continue operations in the future. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event our company cannot continue in existence. We continue to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like NYSE Amex. Accordingly, shareholders may have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority's requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 28, 2011 we issued 2,500,000 units at $0.10 per unit to an accredited investor for net proceeds of $250,000. Each unit consists of one common share and one-half of one common share purchase warrant, each whole warrant entitling the holder to subscribe for one share at a price of $0.15 per share for a period of 18 months. The securities were issued pursuant to a private placement approved by our board of directors under Section 4(2) of the Securities Act of 1933.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. [REMOVED AND RESERVED]
ITEM 5. OTHER INFORMATION
On March 1, 2011, we entered into a consulting agreement with Illyria Inc., (whose executive, Leland Verner, is a former director of our company) to provide strategic planning and business development services to our company. The agreement has a term ending December 31, 2012 and a fee of $120,000 per annum with eligibility for additional compensation in the form of warrants or options at the discretion of our company.
On March 1, 2011, we entered into a consulting agreement with Wayne Parsons, a director of our company, to provide strategic planning and business development services to our company. The agreement has a term ending December 31, 2012 and a fee of $60,000 per annum with eligibility for additional compensation in the form of warrants or options at the discretion of our company.
ITEM 6. EXHIBITS
Exhibit
No. Description
--- -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on October 23, 2006).
3.2 By-laws (incorporated by reference from our Registration Statement on
Form SB-2 filed on October 23, 2006).
3.3 Articles of Merger (incorporated by reference from our Current Report
on Form 8-K filed on April 12, 2010).
3.4 Certificate of Change (incorporated by reference from our Current
Report on Form 8-K filed on April 12, 2010).
(10) MATERIAL CONTRACTS
10.1 Mineral Lease Agreement between Royce L. Hackworth and Belva L. Tomany
and our company dated April 16, 2010. (incorporated by reference from
our Current Report on Form 8-K filed on April 19, 2010).
10.2 2010 Stock Option Plan (incorporated by reference from our Current
Report on Form 8-K filed on August 25, 2010).
10.3 Form of Stock Option Agreement (incorporated by reference from our
Current Report on Form 8-K filed on August 25, 2010).
10.4* Convertible Loan Agreement between our company and Monaco Capital Inc.
dated December 17, 2010.
10.5* Consulting agreement with Illyria Inc. dated March 1, 2011
10.6* Consulting agreement with Wayne Parsons dated March 1, 2011
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certification of the Principal Executive Officer under
Sarbanes-Oxley Act of 2002
31.2* Section 302 Certification of the Principal Financial Officer and
Principal Accounting Officer under Sarbanes-Oxley Act of 2002
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification of the Principal Executive Officer under
Sarbanes-Oxley Act of 2002
32.2* Section 906 Certification of the Principal Financial Officer and
Principal Accounting Officer under Sarbanes-Oxley Act of 2002
----------
|
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN PARAMOUNT GOLD CORP.
(Registrant)
Date: April 14, 2011 /s/ Hugh Aird
------------------------------------------------
Hugh Aird
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 14, 2011 /s/ Ann Dumyn
------------------------------------------------
Ann Dumyn
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)
|
Exhibit 10.4
CONVERTIBLE LOAN AGREEMENT
THIS CONVERTIBLE LOAN AGREEMENT made as of the 17th day of December, 2010, (the
"EFFECTIVE DATE").
BETWEEN:
AMERICAN PARAMOUNT GOLD CORP. of 130 King Street West, Suite 3670 Toronto, Ontario, Canada, M5X 1A9
(hereinafter referred to as the "COMPANY")
AND:
MONACO CAPITAL INC. of 7 New Road, Second Floor, #6 Belize City, Belize
(hereinafter referred to as the "LENDER")
WHEREAS:
A. The Company and the Lender entered into a Convertible Loan Agreement on April 22, 2010 (the "Original Agreement");
B. The Company and the Lender wish to replace the Original Agreement in its entirety with this Agreement;
C. Lender desires to loan funds to the Company pursuant to the terms of this Agreement in the principal amount of up to Five Million Dollars (US$5,000,000) (the "LOAN");
D. The Loan is convertible (the "CONVERSION") into securities of the Company consisting of common shares of the Company with a par value of $0.001 (the "SHARES");
E. The Lender understands and acknowledges to the Company that this Agreement is being made pursuant to an exemption (the "EXEMPTION") from registration provided by Section 4(2) of the United States Securities Act of 1933, as amended (the "SECURITIES ACT") and Rule 903 of Regulation S of the Securities Act for the private offering of securities; and
F. The Company desires to borrow funds from Lender on the terms and conditions set forth in this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained, the receipt of which is hereby acknowledged by each of the parties hereto, the parties hereto covenant and agree each with the other (the "AGREEMENT") as follows:
1. AGREEMENT
1.1 This Agreement hereby replaces the Original Agreement in its entirety.
2. REPRESENTATIONS AND WARRANTIES OF THE LENDER
2.1 The Lender represents and warrants to, and covenants and agrees with the Company that:
(a) the Lender makes the Loan to the Company and acquires the Shares and Conversion Right (both as defined herein) in reliance upon the Exemption from registration provided by Section 4(2) of the Securities Act and Rule 903 of Regulation S of the Securities Act for the private offering of securities;
(b) the Lender is eligible to make the Loan to the Company and acquire the Shares and Conversion Right in the Company under Regulation S, and all statements set forth in the Declaration of Regulation S Eligibility, attached hereto as 0, are true and correct and may be relied upon by the Company; further, all information, representations and warranties contained in this Agreement, or that have been otherwise given to the Company, are correct and complete as of the date hereof, and may be relied upon by the Company;
(c) the Lender is aware of the significant economic and other risks involved in making the Loan to the Company and in acquiring the Shares and acquiring and/or exercising the Conversion Right;
(d) the Lender has consulted with its own securities advisor as to its eligibility to acquire the Shares and acquire and/or exercise the Conversion Right under the laws of its home jurisdiction and acknowledges that the Company has made no effort and takes no responsibility for the consequences to the Lender as a non-U.S. investor acquiring the Shares and this Conversion right and, in particular, in purchasing U.S.-based securities upon exercise, if any, of the Conversion Right;
(e) no federal or state agency has passed upon, or make any finding or determination as to the fairness of this investment, and that there have been no federal or state agency recommendations or endorsements of the investment made hereunder;
(f) the Lender acknowledges that:
(i) there are substantial restrictions on the sale or transferability of any Shares acquired upon exercise of the Conversion Right and understands that, although the Company is a reporting company, the Lender is, upon acquiring the Shares upon exercising the Conversion Rights, purchasing unregistered securities;
(ii) the Lender may not be able to liquidate this investment in the event of any financial emergency and will be required to bear the economic risk of this investment for a lengthy or even indefinite period of time;
(iii)the Company is not contractually obligated to register under the Securities Act any Shares acquired upon an exercise of the Conversion Right; and
(iv) any Shares acquired by the Lender upon exercise of the Conversion Right may never be sold or otherwise transferred without registration under the Securities Act, unless an exemption from registration is available.
(g) the Lender, alone or with its advisor, has enough knowledge and experience in financial and business matters to make it capable of evaluating the merits and risks of investing in the Company;
(h) the Lender makes the Loan to the Company and acquires the Shares and the Conversion Right as principal for its own account and not for the benefit of any other person;
(i) the Lender understands that any certificates representing any Shares acquired by the Lender upon exercise of the Conversion Right will have a resale legend on them that will read substantially as follows:
THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"). THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT, AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISPOSITION THEREOF, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR THE BENEFIT OF U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (ii) OTHERWISE UNTIL ONE YEAR AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF SUCH SECURITIES OR THE CLOSING DATE OF THE SALE AND TRANSFER THEREOF, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S (OR RULE 144A, IF AVAILABLE) UNDER THE ACT. TERMS USED ABOVE HAVE THE MEANING GIVEN TO THEM BY REGULATION S.
(j) the Lender has good and sufficient right and authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement on the terms and conditions contained herein.
2.2 The representations, warranties, covenants and agreements of and by the Lender contained in, or delivered pursuant to, this Agreement shall be true at and as of the Effective Date and shall remain in full force and effect throughout the term of this Agreement.
3. THE LOAN
3.1 Subject to the terms of this Agreement, the Lender hereby agrees to loan to the Company, and the Company hereby agrees to borrow from the Lender, the sum of up to US$5,000,000.
3.2 The Company hereby agrees that the Lender had previously forwarded $500,932.50 to the Company in principal pursuant to the Original Agreement (the "Original Loan") and that such amount, including all accrued interest, be treated as if issued under the terms of this Agreement.
3.3 Immediately following the execution of this Agreement, the Lender shall deliver to the Company $100,000 of the Loan amount by certified cheque or money order made payable to the Company, or by wire transfer to the Company's bank account (the "ADVANCEMENT DATE"), and thereafter such amounts as may be requested by the Company, subject to the concurrence of the lender, up to the total Loan amount.
3.4 Unless repaid earlier, any funds forwarded by the Lender under this Agreement shall be payable in full by 5:00 p.m. local time in Toronto, Ontario, one year from the Effective Date (the "DUE DATE"). If such day falls on a Sunday or statutory holiday, then by 5:00 p.m. local time in Toronto, Ontario, on the first business day after the Due Date.
3.5 The Loan shall bear interest at the rate of 10% per annum, payable on the Due Date, (the "INTEREST") calculated on the principal amount of the Loan outstanding.
3.6 The Company shall be entitled to prepay any sum up to the full amount of the Loan and accrued Interest then outstanding at any time, upon the payment of such amount and an additional 10% of such amount.
3.7 At any time after an Advancement Date, if the Company has not paid the Loan and accrued Interest in full, the Lender may by providing written notice (the "NOTICE") and the Declaration attached hereto as 0 to the Company, exercise its rights of Conversion in respect of either a portion of or the total outstanding amount of the Loan as of that date into Shares of the Company (the "CONVERSION RIGHT"), on the following terms:
(a) The number of Shares issuable under the Conversion Right (the "CONVERSION RATE") shall be determined by dividing (x) that portion of the outstanding principal balance and accrued Interest under the Loan on such date that the Lender elects to convert by (y) the Conversion Price (as defined below) then in effect on the date on which the Lender faxes the Notice of conversion, duly executed, to the Company (the "CONVERSION Date"). With respect to partial conversions of this Loan, the Company shall keep written records of the amount of this Loan converted as of each Conversion Date.
(b) The term "CONVERSION PRICE" shall mean volume weighted average price for the Company's common stock during the ten (10) trading day period ending on the latest complete trading day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable reporting service ("Reporting Service") mutually acceptable to Lender and the Company (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the "pink sheets" by the National Quotation Bureau, Inc.
3.8 Within seven (7) days of Notice by the Lender exercising its Conversion Rights hereunder, the Company shall deliver a Share Certificate to the Lender representing the number of Shares acquired by the Lender pursuant to the Conversion Rate set out in subparagraph 2.7 of this Agreement.
4. COVENANTS AND AGREEMENTS OF THE LENDER
4.1 The Lender covenants and agrees with the Company that the Lender shall not make demand for payment of the Loan prior to the Due Date, except as otherwise required herein, unless the Loan has become due and payable in accordance with the provisions of this Agreement.
4.2 In order to ensure eligibility to receive the Shares, the Lender must provide the Declaration attached hereto as 0.
5. DEFAULT
5.1 If one or more of the following events shall occur, namely:
(a) the Company fails to pay any Principal or accrued Interest amounts when due and fails to repay the Loan on the Due Date;
(b) the Company makes an assignment for the benefit of its creditors or files a petition in bankruptcy or is adjudicated insolvent or bankrupt or petitions or applies to any tribunal for any receiver, receiver manager, trustee, liquidator or sequestrator of or for the Company or any of the Company's assets or undertaking, or the Company makes a proposal or compromise with its creditors or if an application or a petition similar to any of the foregoing is made by a third party creditor and such application or petition remains unstayed or undismissed for a period of thirty (30) days;
(c) an order of execution against any of the Company's assets remains unsatisfied for a period of ten (10) days;
(d) the Company fails to observe and comply with any material term, condition or provision of this Agreement or any other agreement or document delivered hereunder, and such failure continues unremedied for a period of thirty (30) days;
(e) any representations, warranties, covenants or agreements contained in this Agreement or any document delivered to the Lender hereunder are found to be untrue or incorrect as at the date thereof; or
(f) any lender (including the Lender) of any mortgage, charge or encumbrance on any of the Company's assets and undertaking does anything to enforce or realize on such mortgage, charge or encumbrance;
then the Loan to the date of such default shall, at the option of the Lender, immediately become due and payable without presentment, protest or notice of any kind, all of which are waived by the Company.
6. INDEPENDENT LEGAL ADVICE
6.1 The Lender acknowledges that:
(a) Macdonald Tuskey, Corporate and Securities Lawyers received instructions from the Company and does not represent the Lender;
(b) the Lender has been requested to obtain its own independent legal advice on this Agreement prior to signing this Agreement;
(c) the Lender has been given adequate time to obtain independent legal advice;
(d) by signing this Agreement, the Lender confirms that it fully understands this Agreement; and
(e) by signing this Agreement without first obtaining independent legal advice, the Lender waives its right to obtain independent legal advice.
7. GENERAL
7.1 For the purposes of this Agreement, time is of the essence.
7.2 The parties hereto shall execute and deliver all such further documents and instruments and do all such acts and things as may either before or after the execution of this Agreement be reasonably required to carry out the full intent and meaning of this Agreement.
7.3 This Agreement shall be construed in accordance with the laws of the State of Nevada.
7.4 This Agreement may be assigned by the Lender subject to any assignee making requisite representations to meet applicable securities law exemptions; this Agreement may not be assigned by the Company.
7.5 This Agreement may be signed by the parties in as many counterparts as may be deemed necessary, each of which so signed shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument.
7.6 All notices, requests, demands or other communications hereunder shall be in writing and shall be "deemed delivered" to a party on the date it is hand delivered to such party's address first above written, or to such other address as may be given in writing by the parties hereto.
(Execution Page Follows)
IN WITNESS WHEREOF the parties have hereunto set their hands effective as of the date first above written.
AMERICAN PARAMOUNT GOLD CORP.
Per: /s/ "Hugh H. Aird"
---------------------------------------
Hugh H. Aird, President
|
MONACO CAPITAL INC.
Per: /s/ "Andrew Godfrey"
---------------------------------------
Andrew Godfrey
|
SCHEDULE A
DECLARATION OF REGULATION S ELIGIBILITY
Regulation S of the Securities Act is available for the use of non-U.S. Persons only. This Declaration must be answered fully and returned to AMERICAN PARAMOUNT GOLD CORP. to ensure the Company is in compliance with the Securities Act. All information will be held in the strictest confidence and used only to determine investor status. No information will be disclosed other than as required by law or regulation, other demand by proper legal process or in litigation involving the company or its affiliates, controlling persons, officers, directors, partners, employees, attorneys or agents.
I, ON BEHALF OF MONACO CAPITAL INC. ("MONACO"), HEREBY AFFIRM AND DECLARE THAT:
1. Monaco is not a resident of the United States of America.
2. Monaco is not purchasing securities for the benefit of a resident of the United States of America.
3. Monaco is not purchasing securities in the name of a company incorporated in the United States of America or for the benefit of a company incorporated in the United States of America.
4. Monaco is not purchasing securities in my capacity as Trustee for a U.S.-based Trust.
5. Monaco is not purchasing securities in my capacity as the Executor or Administrator of the Estate of a U.S. resident.
6. Monaco is not a U.S. resident purchasing securities through a brokerage account located outside of the United States of America, nor am I using a non-U.S. brokerage account to purchase securities for the benefit of individuals or corporate entities resident within the United States of America.
7. Monaco is not purchasing the securities in an attempt to create or manipulate a U.S. market.
8. Monaco is purchasing the securities as an investment and not with a view towards resale.
9. I will only resell the securities to other non-U.S. residents in accordance with Rule 905 of Regulation S, or to U.S. residents in accordance with the provisions of Rule 144 following the expiration of six months from the Advancement Date, as defined in the Convertible Loan Agreement dated concurrently herewith.
10. Monaco is permitted to purchase the securities under the laws of its home jurisdiction.
11. I understand that if I knowingly and willingly make false statements as to my eligibility to purchase or resell securities under Regulation S, I may become subject to civil and criminal proceedings being taken against me by the United States Securities and Exchange Commission.
Authorized Signatory
Exhibit 10.5
CONSULTING AGREEMENT
THIS AGREEMENT made as of the 1st day of March, 2011
BETWEEEN:
ILLYRIA INC.
5 A Thornwood Road
Toronto, Ontario
M4W2R8
(hereinafter called the "Consultant")
OF THE FIRST PART,
-and-
AMERICAN PARAMOUNT GOLD CORP.
130 King Street West, Suite 3670
Toronto, Ontario
M5X1A9
(hereinafter called the "Corporation")
OF THE SECOND PART.
WHEREAS the Corporation carries on the business of Mineral Exploration & Development,
AND WHEREAS the Corporation has engaged the Consultant to assist it in providing strategic planning and business development services in connection with the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1- ENGAGEMENT AND ACCEPTANCE OF DUTIES
1.1 The Corporation has engaged the Consultant and the Consultant accepted the engagement with the Corporation to provide the following services (the "Services"):
(a) assessing and completing business acquisitions;
(b) financial advice concerning cash flow and management and an overview of the general economic landscape that would be relevant to the raising of capital by the Corporation; and
(c) developing and implementing strategic business relationships
1.2 The Consultant shall and has provided a senior executive (the "Executive") to the Corporation who shall be a person skilled, trained and qualified for this position and acceptable to the Board of Directors of the Corporation who shall be responsible for the performance of the Services hereunder. The Executive shall be and has been Leland Verner.
1.3 The Consultant shall exercise its best efforts for and on behalf of the Corporation and shall cause the Executive to faithfully, honestly and diligently serve the Corporation, and to devote his time, labour, skill and attention to the performance of the Services.
1.4 The Executive shall not be obliged to devote his entire business time and attention to the Business.
ARTICLE 2-TERM
2.1 This Agreement sets out the scope and nature of the agreement and records the terms of such engagement as at the date hereof. This Agreement shall continue after the date hereof for a period ending December 31, 2012 subject to earlier termination in accordance with the terms hereof.
ARTICLE 3-BASIC FEE
3.1 The Consultant shall be paid a basic fee (the "Fee") with adjustments as agreed, commencing March 1, 2011 in the amount of $120,000 per annum payable in equal monthly installments of $10,000 each within 15 days from the date of invoice together with applicable HST. The Consultant shall be eligible to receive additional compensation in the form of warrants or stock options at the discretion of the Board.
ARTICLE 4- BLACKBERRY
4.1 The Executive shall be provided with a Blackberry communication device and the Corporation will pay for the cost of monthly service.
ARTICLE 5-EXPENSES
5.1 The Consultant shall be entitled to reimbursement for all reasonable expenses actually and properly incurred by the Consultant in the course of the performance of the Services, subject to submission of invoices to the Corporation and the prior written approval of such expenses by the President & CEO of the Corporation if that expense is over $500.
ARTICLE 6-CONFIDENTIAL INFORMATION AND RESTICTIVE COVENANTS
6.1 The Consultant acknowledges that in the course of carrying out, performing and fulfilling the Services hereunder, the Consultant will have access to and will be entrusted with confidential and proprietary information and trade secrets belonging to the Corporation (the "Confidential Information"). The Consultant acknowledges and agrees that the right to maintain the confidentiality of the Confidential Information, and the right to preserve the goodwill of the Corporation, constitute proprietary rights which the Corporation is entitled to protect. Accordingly, the Consultant hereby covenants and agrees with the Corporation that the Consultant will not at any time, either during the term hereof or at any time thereafter, disclose any of the Confidential Information to any person other than to the officers, directors and management of the Corporation, or shall it use the same for any purpose other than those of the Corporation. The foregoing provisions shall not apply to and the "Confidential Information" shall exclude any information which is or becomes available to, or is or becomes known to the public or to competitors of the Corporation otherwise than by a breach of this Agreement, or to any information the Consultant is required to disclose by order of any court or tribunal of competent jurisdiction or to comply with any law, rule of regulation.
ARTICLE 7-NON-COMPETITION
7.1 The Consultant agrees that it shall not, at any time during the term of this Agreement and for a period of 24 months thereafter, take any steps or make any approach, either directly or indirectly, to any employee of the Corporation or its subsidiaries calculated to lead such employee to leave his or her employment.
7.2 THE CONSULTANT ACKNOWLEDGES AND AGREES THAT:
(a) the duration within which the restrictions set forth in Sections 7.1 shall apply have been considered by the Consultant and the restraints and restrictions of and on the future activities of the Consultant are reasonable in the circumstances.
(b) all restrictions in this Agreement are reasonable and valid and all defenses to the strict enforcement thereof by the Corporation are hereby waived by Consultant;
(c) a violation of any of the provisions of this Agreement will result in immediate and irreparable harm and damage to the Corporation; or
(d) in the event of any violation by the Consultant of any provision of this Agreement, the Corporation shall, in addition to any other right to relief, be entitled to equitable relief by way of temporary or permanent injunction and to such other relief as any court of competent jurisdiction may deem just and proper.
7.3 The provisions of this Article 7 shall survive notwithstanding termination of this Agreement.
ARTICLE 8-TERMINATION OF THE AGREEMENT
8.1 The Consultant may terminate its engagement with the Corporation at any time by providing 2 months notice in writing to the Corporation. If the Consultant provides such notice to the Corporation, the Corporation may require the Consultant to cease duties prior to the expiry of the notice period provided that it pays to the Consultant the Fee in accordance with Section 3.1 during the notice.
8.2 The Corporation may terminate the engagement of the Consultant at any time by providing 2 months notice in writing to the Consultant.
ARTICLE 9-MISCELLANEOUS PROVISIONS
9.1 The Consultant acknowledges and agrees that the Consultant is an independent contractor, that the Consultant is not an employee of the Corporation and that this Agreement shall not create at partnership, joint venture, employer/employee, mater/servant or any other relationship between the Corporation and the Consultant.
9.2 No amendment, modification or waiver of any provision of this Agreement or consent to any departure by the parties from any provisions of this Agreement is effective unless it is in writing and signed by the parties and the amendment, modification, waiver or consent is effective only in the specific instance and for the specific purpose for which it is given.
9.3 The Consultant and the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such further acts and documents as shall be reasonably required to accomplish the intention of this Agreement.
9.4 This Agreement and all of the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of the Province of Ontario and the courts of the Province of Ontario shall have exclusive jurisdiction to determine all disputes relating to this Agreement and all of the rights and obligations created hereby. The Consultant and the Corporation hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario.
9.5 In the event that any provision or any part of any provision is deemed to be invalid by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provisions or part of such provisions and the invalidity of such provision or such part shall not affect the validity of any other provisions or the remainder of such provision hereof. All other provisions here of which are otherwise lawful and valid shall remain in full force and effect.
9.6
(a) Except as otherwise expressly provided herein, all notices shall be in writing and either delivered personally, by registered or certified mail or by facsimile or electronic communication. In the case of the Corporation notice shall be at the Corporation's office set out in the front page hereof. In the case of the Consultant notice shall be delivered to the most current address of the Consultant's residence on file with the Corporation.
(b) Any notice which is delivered personally shall be effective when delivered, any notice which is sent by registered or certified mail shall be effective on the fifth business day following the date of mailing and any notice which is delivered by facsimile or electronic communication shall be effective on the first business day following the day of sending.
(c) Any notice given by facsimile or electronic communication shall immediately be confirmed by regular mail.
9.7 This Agreement constitutes the entire agreement between the parties as to the matters dealt with herein. There are not and shall not be any oral statements, representations, warranties, undertakings or agreements between the parties.
9.8 This Agreement and all of its provisions shall inure to the benefit of and the binding upon the parties, the successors and assigns of the Corporation and to the legal personal representatives of the Consultant.
9.9 This Agreement will be effective as of March 1, 2011.
IN WITNESS WHEREOF this Agreement has been duly executed by the parties this 15th day of March, 2011.
ILLYRIA INC. AMERICAN PARAMOUNT GOLD CORP. /s/ Leland Verner /s/ Hugh H. Aird PER: PER: Hugh H. Aird, President & CEO Authorized Signing Officer Authorized Signing Officer |
FOR VALUE RECEIVED the undersigned, being the Executive designated in the above Consulting Agreement, hereby acknowledges and confirms the terms of the Consulting Agreement and agrees to observe and to be bound by the terms thereof that are binding upon the Consultant specifically including the provisions of Article 6 and Article 7.
DATED as of 15th day of March, 2011.
PER: /s/ Leland Verner Leland Verner |
Exhibit 10.6
CONSULTING AGREEMENT
THIS AGREEMENT made as of the 1st day of March, 2011
BETWEEEN:
WAYNE PARSONS
1455 Corley Dr.
London, Ontario
N6G 2K5
(hereinafter called the "Consultant")
OF THE FIRST PART,
-and-
AMERICAN PARAMOUNT GOLD CORP.
130 King Street West, Suite 3670
Toronto, Ontario
M5X1A9
(hereinafter called the "Corporation")
OF THE SECOND PART.
WHEREAS the Corporation carries on the business of Mineral Exploration & Development,
AND WHEREAS the Corporation has engaged the Consultant to assist it in providing strategic planning and business development services in connection with the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration if the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1-ENGAGEMENT AND ACCEPTANCE OF DUTIES
1.1 The Corporation has engaged the Consultant and the Consultant accepted the engagement with the Corporation to provide the following services (the "Services"):
(a) assessing and completing business acquisitions;
(b) financial advice concerning cash flow and management and an overview of the general economic landscape that would be relevant to the raising of capital by the Corporation; and
(c) developing and implementing strategic business relationships
1.3 The Consultant shall exercise its best efforts for and on behalf of the Corporation and shall faithfully, honestly and diligently serve the Corporation, and to devote its time, labour, skill and attention to the performance of the Services.
1.4 The Consultant shall not be obliged to devote its entire business time and attention to the Business.
ARTICLE 2-TERM
2.1 This Agreement sets out the scope and nature of the agreement and records the terms of such engagement as at the date hereof. This Agreement shall continue after the date hereof for a period ending December 31, 2012 subject to earlier termination in accordance with the terms hereof.
ARTICLE 3-BASIC FEE
3.1 The Consultant shall be paid a basic fee (the "Fee") with adjustments as agreed, commencing March 1, 2011 in the amount of $60,000 per annum payable in equal monthly installments of $5,000 each within 15 days from the date of invoice together with applicable HST. The Consultant shall be eligible to receive additional compensation in the form of warrants or stock options at the discretion of the Board of Directors of the Corporation.
ARTICLE 4-BLACKBERRY
4.1 The Consultant shall be provided with a Blackberry communication device and the Corporation will pay for the cost of monthly service.
ARTICLE 5-EXPENSES
5.1 The Consultant shall be entitled to reimbursement for all reasonable expenses actually and properly incurred by the Consultant in the course of the performance of the Services, subject to submission of invoices to the Corporation and the prior written approval of such expenses by the President & CEO of the Corporation if that expense is over $500.
ARTICLE 6-CONFIDENTIAL INFORMATION AND RESTICTIVE COVENANTS
6.1 The Consultant acknowledges that in the course of carrying out, performing and fulfilling the Services hereunder, the Consultant will have access to and will be entrusted with confidential and proprietary information and trade secrets belonging to the Corporation (the "Confidential Information"). The Consultant acknowledges and agrees that the right to maintain the confidentiality of the Confidential Information, and the right to preserve the goodwill of the Corporation, constitute proprietary rights which the Corporation is entitled to protect. Accordingly, the Consultant hereby covenants and agrees with the Corporation that the Consultant will not at any time, either during the term hereof or at any time thereafter, disclose any of the Confidential Information to any person other than to the officers, directors and management of the Corporation, or shall it use the same for any purpose other than those of the Corporation. The foregoing provisions shall not apply to and the "Confidential Information" shall exclude any information which is or becomes available to, or is or becomes known to the public or to competitors of the Corporation otherwise than by a breach of this Agreement, or to any information the Consultant is required to disclose by order of any court or tribunal of competent jurisdiction or to comply with any law, rule of regulation.
ARTICLE 7-NON-COMPETITION
7.1 The Consultant agrees that it shall not, at any time during the term of this Agreement and for a period of 24 months thereafter, take any steps or make any approach, either directly or indirectly, to any employee of the Corporation or its subsidiaries calculated to lead such employee to leave his or her employment.
7.2 THE CONSULTANT ACKNOWLEDGES AND AGREES THAT:
(a) the duration within which the restrictions set forth in Sections 7.1 shall apply have been considered by the Consultant and the restraints and restrictions of and on the future activities of the Consultant are reasonable in the circumstances.
(b) all restrictions in this Agreement are reasonable and valid and all defenses to the strict enforcement thereof by the Corporation are hereby waived by Consultant;
(c) a violation of any of the provisions of this Agreement will result in immediate and irreparable harm and damage to the Corporation; or
(d) in the event of any violation by the Consultant of any provision of this Agreement, the Corporation shall, in addition to any other right to relief, be entitled to equitable relief by way of temporary or permanent injunction and to such other relief as any court of competent jurisdiction may deem just and proper.
7.3 The provisions of this Article 7 shall survive notwithstanding termination of this Agreement.
ARTICLE 8-TERMINATION OF THE AGREEMENT
8.1 The Consultant may terminate its engagement with the Corporation at any time by providing 2 months notice in writing to the Corporation. If the Consultant provides such notice to the Corporation, the Corporation may require the Consultant to cease duties prior to the expiry of the notice period provided that it pays to the Consultant the Fee in accordance with Section 3.1 during the notice.
8.2 The Corporation may terminate the engagement of the Consultant at any time by providing 2 months notice in writing to the Consultant.
ARTICLE 9-MISCELLANEOUS PROVISIONS
9.1 The Consultant acknowledges and agrees that the Consultant is an independent contractor, that the Consultant is not an employee of the Corporation and that this Agreement shall not create at partnership, joint venture, employer/employee, mater/servant or any other relationship between the Corporation and the Consultant.
9.2 No amendment, modification or waiver of any provision of this Agreement or consent to any departure by the parties from any provisions of this Agreement is effective unless it is in writing and signed by the parties and the amendment, modification, waiver or consent is effective only in the specific instance and for the specific purpose for which it is given.
9.3 The Consultant and the Corporation shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such further acts and documents as shall be reasonably required to accomplish the intention of this Agreement.
9.4 This Agreement and all of the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of the Province of Ontario and the courts of the Province of Ontario shall have exclusive jurisdiction to determine all disputes relating to this Agreement and all of the rights and obligations created hereby. The Consultant and the Corporation hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario.
9.5 In the event that any provision or any part of any provision is deemed to be invalid by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provisions or part of such provisions and the invalidity of such provision or such part shall not affect the validity of any other provisions or the remainder of such provision hereof. All other provisions here of which are otherwise lawful and valid shall remain in full force and effect.
9.6
(a) Except as otherwise expressly provided herein, all notices shall be in writing and either delivered personally, by registered or certified mail or by facsimile or electronic communication. In the case of the Corporation notice shall be at the Corporation's office set out in the front page hereof. In the case of the Consultant notice shall be delivered to the most current address of the Consultant's residence on file with the Corporation.
(b) Any notice which is delivered personally shall be effective when delivered, any notice which is sent by registered or certified mail shall be effective on the fifth business day following the date of mailing and any notice which is delivered by facsimile or electronic communication shall be effective on the first business day following the day of sending.
(c) Any notice given by facsimile or electronic communication shall immediately be confirmed by regular mail.
9.7 This Agreement constitutes the entire agreement between the parties as to the matters dealt with herein. There are not and shall not be any oral statements, representations, warranties, undertakings or agreements between the parties.
9.8 This Agreement and all of its provisions shall inure to the benefit of and the binding upon the parties, the successors and assigns of the Corporation and to the legal personal representatives of the Consultant.
9.9 This Agreement will be effective as of March 1, 2011.
IN WITNESS WHEREOF this Agreement has been duly executed by the parties this 15th day of March, 2011.
WAYNE PARSONS AMERICAN PARAMOUNT GOLD CORP.
/s/ Hugh H. Aird
PER: /s/ Wayne Parsons PER: Hugh H. Aird, President & CEO
Authorized Signing Officer Authorized Signing Officer
|
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Hugh Aird, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Paramount Gold Corp.;
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 registrant as of, and for, the periods presented in this report;
4. The registrant'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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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
registrant, 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) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: April 14, 2011 /s/ Hugh Aird ----------------------------------------------- HUGH AIRD President, Chief Executive Officer and Director (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ann Dumyn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Paramount Gold Corp.;
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 registrant as of, and for, the periods presented in this report;
4. The registrant'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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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
registrant, 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) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: April 14, 2011 /s/ Ann Dumyn ----------------------------------------------------- Ann Dumyn Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting 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
I, Hugh Aird, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q of American Paramount Gold Corp. for the period ended February 28, 2011 (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 American Paramount Gold Corp.
Dated: April 14, 2011
/s/ Hugh Aird
-----------------------------------------------
Hugh Aird
President, Chief Executive Officer and Director
(Principal Executive Officer)
American Paramount Gold Corp.
|
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Paramount Gold Corp. and will be retained by American Paramount Gold Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
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
I, Ann Dumyn, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q of American Paramount Gold Corp. for the period ended February 28, 2011 (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 American Paramount Gold Corp.
Dated: April 14, 2011
/s/ Ann Dumyn
------------------------------------------
Ann Dumyn
Chief Financial Officer, Secretary and
Treasurer (Principal Financial Officer and
Principal Accounting Officer)
American Paramount Gold Corp.
|
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Paramount Gold Corp. and will be retained by American Paramount Gold Corp. and furnished to the Securities and Exchange Commission or its staff upon request.