UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 31, 2005
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
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Commission File Number 0-26709
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BROOKMOUNT EXPLORATIONS INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0201259
--------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
666 Burrard Street, Suite 600
Vancouver, British Columbia V6C 2X8
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(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-676-5244
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None
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 15,834,585 shares of $0.001 par value
common stock outstanding as of May 31, 2005.
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
May 31, 2005
(Stated in US Dollars)
(Unaudited)
BALANCE SHEETS
INTERIM STATEMENTS OF OPERATIONS
INTERIM STATEMENTS OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO THE INTERIM FINANCIAL STATEMENTS
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
BALANCE SHEETS
(Stated in US Dollars)
May 31, November 30,
ASSETS 2005 2004
------ ---- ----
(Unaudited) (Audited)
Current
Cash $ 69,206 $ 51,103
Prepaid expenses 7,286 3,863
----------------- -----------------
76,492 54,966
Advances - Note 2 31,860 -
Capital assets - Note 3 1,508 1,774
----------------- -----------------
$ 109,860 $ 56,740
================= =================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 32,916 $ 43,004
Due to related parties - Note 6 59,508 58,516
----------------- -----------------
92,424 101,520
----------------- -----------------
SHAREHOLDERS' EQUITY(DEFICIENCY)
Common stock, $0.001 par value - Note 5
200,000,000 shares authorized
15,834,585 shares issued (November 30, 2004 - 10,284,848) 15,835 10,285
Additional paid-in capital 2,768,201 498,056
Stock subscriptions receivable (100) (100)
Deficit accumulated during the development stage (2,766,500) (553,021)
----------------- -----------------
17,436 (44,780)
----------------- -----------------
$ 109,860 $ 56,740
================= =================
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
(Stated in US Dollars)
(Unaudited)
December 9, 1999
(Date of
Three months ended Six months ended Inception) to
May 31 May 31, May 31,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
Expenses
General and administrative $ 93,787 $ 88,881 $ 184,884 $ 163,232 $ 690,126
- Note 6
Mineral property costs - - 2,028,595 - 2,076,374
--------------- ----------------- ----------------- ----------------- ---------------
- Note 4
Net loss for the period $ (93,787) $ (88,881) $ (2,213,479) $ (163,232) $ (2,766,500)
=============== ================= ================= -================= ===============
Basic loss per share $ (0.00) $ (0.00) $ (0.16) $ (0.01)
============== ================ ================ ===============
Weighted average number of shares
outstanding 15,665,403 9,991,014 13,404,368 9,991,014
=============== ================= ================= ===============
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the six months ended May 31, 2005 and 2004
and for the period December 9, 1999 (Date of Inception) to
May 31, 2005
(Stated in US Dollars)
(Unaudited)
December 9,
1999
(Date of
Inception)
Six months ended to
May 31, May 31,
2005 2004 2005
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ (2,213,479) $ (163,232) $ (2,766,500)
Add items not affecting cash:
Depreciation 266 - 305
Capital contributions - - 29,250
Mineral property costs 2,000,000 15,130 2,000,000
Changes in non-cash working capital balances
related to operations
Prepaid expenses (3,423) 689 (7,286)
Accounts payable and accrued liabilities (10,088) 2,671 32,916
Due to related parties 992 862 59,508
----------------- ----------------- -----------------
(225,732) (143,880) (651,807)
----------------- ----------------- -----------------
Cash Flows used in Investing Activities
Acquisition advances (31,860) - (31,860)
Acquisition of capital assets - - ( 1,813)
----------------- ----------------- -----------------
(31,860) - (33,673)
Cash Flows from Financing Activity
Capital stock issued 275,695 140,594 754,686
----------------- ----------------- -----------------
Increase (decrease) in cash during the period 18,103 (3,286) 69,206
Cash, beginning of the period 51,103 37,429 -
----------------- ----------------- -----------------
Cash, end of the period $ 69,206 $ 34,143 $ 69,206
================= ================= =================
Supplemental disclosure of cash flow
Information
Cash paid for:
Interest $ - $ - $ -
================= ================= =================
Income taxes $ - $ - $ -
================= ================= =================
Non-cash transaction - Note 7
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period December 9, 1999 (Date of Inception) to May 31, 2005
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Additional Stock During the
Common Shares Paid-in Subscriptions Exploration
-----------------------
Number Par Value Capital Receivable Stage Total
------ --------- ------- ---------- ----- -----
Capital stock issued for cash - at $0.001 3,500,000 $ 3,500 $ - $ - $ - $ 3,500
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 1999 3,500,000 3,500 - - - 3,500
Capital stock issued for cash - at $0.002 5,750,000 5,750 5,750 - - 11,500
- at $0.20 32,400 32 6,448 - - 6,480
Contributions to capital by officers - - 9,000 - - 9,000
Net loss for the year - - - - (31,327) (31,327)
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 2000 9,282,400 9,282 21,198 - (31,327) (847)
Contributions to capital by officers - - 9,000 - - 9,000
Net loss for the year - - - - (17,215) (17,215)
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 2001 9,282,400 9,282 30,198 - (48,542) (9,062)
Contributions to capital by officers - - 9,000 - - 9,000
Net loss for the year - - - - (17,811) (17,811)
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 2002 9,282,400 9,282 39,198 - (66,353) (17,873)
Capital stock issued for cash - at $0.25 176,500 177 43,948 - - 44,125
- at $0.50 250,000 250 125,262 - - 125,512
Contributions to capital by officers - - 2,250 - - 2,250
Net loss for the year - - - - (164,407) (164,407)
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 2003 9,708,900 9,709 210,658 - (230,760) (10,393)
Capital stock issued for cash - at $0.50 575,948 576 287,398 (100) - 287,874
Net loss for the year - - - - (322,261) (322,261)
---------- ---------- --------- ----------- ---------- -----------
Balance, as at November 30, 2004 10,284,848 10,285 498,056 (100) (553,021) (44,780)
...Cont'd
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period December 9, 1999 (Date of Inception) to May 31, 2005
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Additional Stock During the
Common Shares Paid-in Subscriptions Exploration
-----------------------
Number Par Value Capital Receivable Stage Total
------ --------- ------- ---------- ----- -----
Capital stock issued for cash - at $0.40 62,500 63 24,937 - - 25,000
Capital stock issued for cash - at $0.50 411,190 411 205,184 - - 205,595
Capital stock issued for cash - at $0.56 35,714 36 19,964 - - 20,000
Capital stock issued for cash - at $0.60 10,333 10 6,190 - - 6,200
Capital stock issued for cash - at $0.63 30,000 30 18,870 - - 18,900
Capital stock issued for resource property
- at $0.40 5,000,000 5,000 1,995,000 - - 2,000,000
Net loss for the period - - - - (2,213,479) (2,213,479)
---------- ---------- --------- ------------- ------------ ------------
Balance, as at May 31, 2005 15,834,585 $ 15,835 $ 2,768,201 $ (100) $ (2,766,500) $ 767,436
========== ========= ============ ============= ============= ===========
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
May 31, 2005
(Stated in US Dollars)
(Unaudited)
Note 1 Nature of Continued Operations and Basis of Presentation
--------------------------------------------------------
The Company is an exploration stage company. The Company was
organized for the purpose of acquiring, exploring and developing
mineral properties. The recoverability of amounts from properties
acquired will be dependant upon discovery of economically
recoverable reserves, confirmation of the Company's interest in
the underlying property, the ability of the Company to obtain
necessary financing to satisfy the expenditure requirements
under the property agreement and to complete the development of
the property and upon future profitable production.
Going Concern
-------------
The financial statements have been prepared on the basis of a
going concern which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has incurred losses since inception of $2,766,500 and
further losses are anticipated in the development of its mineral
properties raising substantial doubt as to the Company's ability
to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on raising additional
capital to fund ongoing exploration and development and ultimately
on generating future profitable operations. The Company will
continue to fund operations with advances, other debt sources and
further equity placements.
Unaudited Interim Financial Statements
--------------------------------------
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB of Regulation S-B. They
do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, except as disclosed herein, there have been no material
changes in the information disclosed in the notes to the financial
statements for the year ended November 30, 2004 included in the
Company's Annual Report on Form 10-KSB filed with the Securities
and Exchange Commission. The interim unaudited financial
statements should be read in conjunction with those financial
statements included in the Form 10-KSB. In the opinion of
Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments,
have been made. Operating results for the six months ended May 31,
2005 are not necessarily indicative of the results that may be
expected for the year ending November 30, 2005.
Brookmount Explorations Inc.
(An Exploration Stage Company)
Notes to the Interim Financial Statements
May 31, 2005
(Stated in US Dollars)
(Unaudited) - Page 2
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Note 2 Advances
----------
On May 13, 2005, the Company signed a "Letter of Agreement" with a
private corporation Jemma Resources Corp. ("Jemma") to acquire
100% of outstanding capital stock of Jemma. This letter of
agreement will be replaced by a binding agreement between the
Company and Jemma. At May 31, 2005 this agreement has not been
finalized. The purchase price consists of 3,000,000 shares of
common stock of the Company, 3,000,000 share purchase warrants at
$1.50 exercisable within 24 months from the date of the agreement
and approximately CDN$75,000 in advances to secure an extension
for the purchase of mineral property and for operating costs.
During the six months ended May 31, 2005 the Company advanced
$31,860 (CDN $40,000) pursuant to this agreement. Should the
binding agreement not be completed the advances are refundable.
Note 3 Capital Assets
--------------
November 30,
May 31, 2005 2004
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Accumulated
Cost Depreciation Net Net
---- ------------ --- ---
Computer equipment $ 1,813 $ 305 $ 1,508 $ 1,774
============ =============== =============== ===========
Note 4 Mineral Properties
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a) Abitibi West County, Quebec, Canada
-----------------------------------
During 2003 the Company acquired five mineral claims located
in the Chazel Township, in the Province of Quebec for $48,079.
The claims are in good standing until November 14, 2006.
b) Mercedes Property, Junin, Peru
------------------------------
Pursuant to a property acquisition agreement dated July 3,
2003 and amended on January 24, 2005, the Company may acquire
a 100% interest in 2,611 hectares located in Central Peru from
a director of the Company (the "Vendor") for consideration of
$22,500 (paid during the three months ended February 28, 2005)
and the issuance of 5,000,000 common shares valued at $0.40
per share (issued). The vendor has directed the Company to
issue 2,100,000 of these common shares to two other directors
of the Company. At May 31, 2005 the legal ownership of this
property has not been transferred to the Company.
Brookmount Explorations Inc.
(An Exploration Stage Company)
Notes to the Interim Financial Statements
May 31, 2005
(Stated in US Dollars)
(Unaudited) - Page 3
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Note 5 Capital Stock
-------------
Commitments
-----------
Pursuant to an offering memorandum dated July 23, 2003, the
Company undertook to sell a minimum of 1,000,000 common shares at
$0.50 per share. At May 31, 2005, 2005, the Company had sold
1,608,622 common shares for proceeds of $750,281.
Note 6 Related Party Transactions
--------------------------
The Company was charged the following amounts by directors of the
Company, a former director and/or companies with directors or
officers in common:
December 9,
1999
(Date of
Six months ended Inception) to
May 31, May 31,
2005 2004 2005
---- ---- ----
General and administrative:
Consulting fees $ - $ - $ 3,000
Management fees 102,000 80,000 378,000
--------------- ------------- -----------------
$ 102,000 $ 80,000 $ 381,000
=============== ============= =================
The charges were measured by the exchange amount which is the
amount agreed upon by the transacting parties.
Amounts due to related parties are due to directors of the Company
in respect to unpaid management fees and advances. These amounts
are unsecured, non-interest bearing and have no specific terms for
repayment.
During the six months ended May 31, 2005 the Company purchased a
mineral property from one of the Company's directors (See note 4).
Note 7 Non-cash Transaction
--------------------
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statement of
cash flows. During the period ended May 31, 2005, the Company
issued 5,000,000 common shares valued at $0.40 per share pursuant
to the Mercedes Property acquisition agreement (See note 4). This
transaction was excluded from the statement of cash flows for the
six months ended May 31, 2005 and for the period December 9, 1999
(Date of Inception) to May 31, 2005.
Item 2. Management's Discussion and Analysis or Plan of Operation
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this Risk Factors section and elsewhere in this annual report.
Item 3. Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was conducted by directors of the
Company.
Based upon that evaluation, the Company concluded that the disclosure controls
and procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.
Plan of Operation
Our plan of operations for the twelve months following the date of this
quarterly report is to complete initial exploration programs on the Brookmount
and Mercedes properties, as well as proceeding with the development of the
Mooseland Deposit property located in Halifax County, Nova Scotia. We
anticipate that the programs on the Brookmount and Mercedes properties
will cost $10,000 and $220,000 respectively. In addition, we
expect to pay approximately $830,000 (CDN$1,000,000) to Globex
Mining Enterprises Inc. pursuant to our agreement concerning the Mooseland
Deposit property, as well as $250,000 on the development of the property.
In addition, we anticipate spending $17,200 on professional fees, $99,000 on
salaries and wages, $10,000 on travel costs, $15,000 on promotional expenses and
$50,000 on other administrative expenses in the next 12 months.
Total expenditures over the next 12 months are therefore expected to be
$1,501,200. We will not be able to proceed with either exploration program, or
meet our administrative expense requirements, without additional financing.
We will not be able to complete the initial exploration programs on our mineral
properties without additional financing. We currently do not have a specific
plan of how we will obtain such funding; however, we anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock. We may also seek to obtain short-term loans from our directors, although
no such arrangement has been made. 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 to meet our
obligations over the next twelve months. We do not have any arrangements in
place for any future equity financing.
Results Of Operations for Six-Month Period Ended May 31, 2005
We incurred operating expenses in the amount of $2,213,479 for the six-month
period ended May 31, 2005, as compared to $163,232 for the comparative period in
2004. The substantial increase in net loss was due to the issue of 5,000,000
shares of common stock at a recorded value of $2,028,595 in connection with the
completion of our acquisition of the Mercedes property. These shares were issued
to our directors and officers in the following amounts:
Peter Flueck 2,900,000
Zaf Sungur 1,050,000
Victor Stillwell 1,050,000
General and administrative expenses for the six-month period ended May 31, 2005
were comparable to those incurred in the same period in 2004 ($184,884 versus
$163,232).
At quarter end, we had cash on hand of $69,206 and total assets of $109,860. Our
liabilities at the same date totalled $92,424 and consisted of accounts payable
and accrued liabilities of $32,916 and $59,508 due to related parties.
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending legal proceeding. Management is not
aware of any threatened litigation, claims or assessments.
Item 2. Changes in Securities
During the six-month period ended May 31, 2005, the Company accepted
subscriptions for a following share issuances:
Number of Shares Price per Share
---------------- ---------------
$0.40 62,500
$0.50 411,190
$0.56 35,714
$0.60 10,333
$0.63 30,000
In addition, we issued 5,000,000 shares at a deemed price of $0.40 per share
pursuant to our purchase of the Merecedes property located in Peru.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
During the six-month period ended May 31, 2005, the Company filed a current
report on Form 8-K announcing that it had entered into a binding letter of
agreement with Jemma Resources Corp. dated May 13, 2005, providing for our
acquisition of 100% of the issued and outstanding shares in the capital of Jemma
Resources Corp. ("Jemma"), a private British Columbia company. Jemma holds the
right to acquire the Dufferin and Mooseland gold properties located in Nova
Scotia. In order to acquire a 100% interest in Jemma, we are required to issue
3,000,000 shares of common stock in our capital and 3,000,000 share purchase
warrants to the stockholders of Jemma. Each share purchase warrant is
exercisable into one share of our common stock for $1.50 for a period of 24
months from the closing date of the acquisition.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Brookmount Explorations Inc.
/s/ Peter Flueck
---------------------------
Peter Flueck
President, Chief Executive
Officer and Director
(Principal Executive Officer)
Dated: July 20, 2005
Brookmount Explorations Inc.
/s/ Zaf Sungur
---------------------------
Zaf Sungur
C.O.O., Secretary, treasurer
and principal accounting
officer
Dated: July 20, 2005