U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 2007
[ ] 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 0-32593
GENEVA RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0441019
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
1005 Terminal Way, Suite 110
Reno, Nevada 89502
(Address of Principal Executive Offices)
(775) 348.9330
(Issuer's telephone number)
Geneva Gold Corp.
(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 Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
____ ____
Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
____ ____
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years.
N/A
Check whether the Registrant filed all documents required to be filed
by Section 12, 13 and 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
____ ____
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of April 6, 2007
Common Stock, $.001 par value 41,200,000
Transitional Small Business Disclosure Format (check one)
Yes No X
Page
____
PART I. FINANCIAL INFORMATION 1
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS F1
STATEMENTS OF OPERATIONS F2
STATEMENTS OF CASH FLOWS F3
NOTES TO FINANCIAL STATEMENTS F4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION 2
ITEM 3. CONTROLS AND PROCEDURES 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
FEBRUARY 28, 2007
(UNAUDITED)
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
1
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
February 28, May 31,
2007 2006
__________________________________________________________________________________________________________________________________
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 15,230 $ 73,383
__________________________________________________________________________________________________________________________________
$ 15,230 $ 73,383
==================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 162,694 $ 19,171
Due to related parties (Note 5) - 16,799
Shareholder's loan (Note 6) 188,126 100,000
__________________________________________________________________________________________________________________________________
350,820 35,970
__________________________________________________________________________________________________________________________________
GOING CONCERN CONTINGENCY AND COMMITMENTS (Notes 1 and 3 )
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock (Note 4)
Authorized
200,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
41,200,000 shares of common stock (May 31, 2006 - 37,200,000) 41,200 16,800
Additional paid-in capital 7,532,967 157,367
Deficit accumulated during the development stage (7,909,757) (136,754)
__________________________________________________________________________________________________________________________________
(335,590) 37,413
__________________________________________________________________________________________________________________________________
$ 15,230 $ 73,383
==================================================================================================================================
The accompanying notes are an integral part of these financial statements
F1
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
(unaudited)
Cumulative
Three months Three months Nine months results from
ended ended Nine months ended April 5, 2004
February 28, February 28, ended February (inception) to
2007 2006 February 28, 28, 2006 February 28,
2007 2007
_________________________________________________________________________________________________________________________________
REVENUE $ - $ - $ - $ - $ 46,974
_________________________________________________________________________________________________________________________________
DIRECT COSTS - - - - 56,481
_________________________________________________________________________________________________________________________________
GROSS MARGIN (LOSS) - - - - (9,507)
_________________________________________________________________________________________________________________________________
GENERAL AND ADMINISTRATIVE EXPENSES
Office and general 29,697 2,306 45,579 5,927 78,452
Consulting fees 26,562 2,836 52,263 8,160 81,356
Mineral Property Expenditures (Note 3) 50,000 - 7,550,000 - 7,550,000
Professional fees 54,927 3,050 125,161 21,833 190,412
_________________________________________________________________________________________________________________________________
(161,186) (8,192) (7,773,003) (27,593) (7,900,220)
_________________________________________________________________________________________________________________________________
NET LOSS $ (161,186) $ (8,192) $ (7,773,003) $ (35,920) $ (7,909,727)
=================================================================================================================================
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.00) $ $(0.00) $ (0.20) $ (0.00)
================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 41,155,556 35,706,720 38,504,029 37,200,000
================================================================================================================
The accompanying notes are an integral part of these financial statements
F2
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(unaudited)
Cumulative
results from
Nine months Nine months April 5, 2004
ended ended (inception) to
February 28, February 28, February 28,
2007 2006 2007
___________________________________________________________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (7,773,003) $ (35,920) $ (7,909,727)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash mineral property expenditures 7,400,000 - 7,400,000
Changes in operating assets and liabilities:
Accounts receivable - (479) -
Prepaid expenses - 8,375 -
Accrued interest on shareholder's loan 3,126 - 3,126
Due to related parties (16,799) - -
Accounts payable and accrued liabilities 143,523 (55,904) 162,694
___________________________________________________________________________________________________________________________________
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (243,153) (83,928) (343,937)
___________________________________________________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on sale of common stock - 100,000 174,167
Proceeds from shareholder advances 185,000 - 185,000
___________________________________________________________________________________________________________________________________
NET CASH PROVIDED BY FINANCING ACTIVITIES 185,000 100,000 359,167
___________________________________________________________________________________________________________________________________
NET INCREASE (DECREASE) IN CASH (58,153) 16,072 15,230
CASH, BEGINNING 73,383 63,704 -
___________________________________________________________________________________________________________________________________
CASH, ENDING $ 15,230 $ 79,776 $ 15,230
===================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES
Interest paid $ - $ - $ -
===================================================================================================================================
Income taxes paid $ - $ - $ -
===================================================================================================================================
The accompanying notes are an integral part of these financial statements
F3
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
________________________________________________________________________________
The Company was incorporated in the State of Nevada on April 5, 2004. The
Company was initially formed to engage in the business of reclaiming and
stabilizing land in preparation for construction in the United States of
America. On November 27, 2006 the Company filed Articles of Merger with the
Secretary of State of Nevada in order to effectuate a merger whereby the Company
(as Revelstoke Industries, Inc.) would merge with its wholly-owned subsidiary,
Geneva Gold Corp. This merger became effective as of December 1, 2006 and the
Company changed its name to Geneva Gold Corp. On March 1, 2007, the Company
(Geneva Gold Corp) merged with its wholly-owned subsidiary, Geneva Resources,
Inc., pursuant to Articles of Merger that the Company filed with the Nevada
Secretary of State. This merger became effective March 1, 2007 and the Company
changed its name to Geneva Resources, Inc.
During the quarter ended November 30, 2006 the Company entered the business of
exploration of precious metals with a focus on the exploration and development
of gold deposits in North America and Internationally. During the period the
Company entered into Option Agreements to obtain mineral leases in Canada and in
Panama.
The Company has elected a fiscal year of May 31. On May 5, 2006; the Company
completed a forward stock split by the issuance of 42 new shares for each 1
outstanding share of the Company's common stock. On October 13, 2006; the
Company completed a forward stock split by the issuance of 4 new shares for each
1 outstanding share of the Company's stock.
GOING CONCERN
To date the Company has generated minimal revenues from its business operations
and has incurred operating losses since inception of $7,909,757. The Company
requires additional funding to meet its ongoing obligations and operating
losses. The ability of the Company to continue as a going concern is dependant
on raising capital to fund its initial business plan and ultimately to attain
profitable operations. Accordingly, these factors raise substantial doubt as to
the Company's ability to continue as a going concern. The Company intends to
continue to fund its mineral exploration business by way of private placements
and advances from related parties as may be required.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principals 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 United States
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material changes in the
information disclosed in the notes to the financial statements for the year
ended May 31, 2006 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 nine months
ended February 28, 2007 are not necessarily indicative of the results that may
be expected for the year ending May 31, 2007.
COMPARATIVE FIGURES
Certain comparative figures have been reclassified in order to conform to the
current year's financial statement presentation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________
BASIS OF PRESENTATION
These financial statements are presented in United States dollars and have been
prepared in accordance with generally accepted accounting principles in the
United States of America.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain 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 expenses during the period. Accordingly, actual results
could differ from those estimates.
F4
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
MINERAL PROPERTY EXPENDITURES
The Company is primarily engaged in the acquisition, exploration and development
of mineral properties.
Mineral property acquisition costs are capitalized in accordance with EITF 04-2
when management has determined that probable future benefits consisting of a
contribution to future cash inflows have been identified and adequate financial
resources are available or are expected to be available as required to meet the
terms of property acquisition and budgeted exploration and development
expenditures. Mineral property acquisition costs are expensed as incurred if the
criteria for capitalization are not met. In the event that mineral property
acquisition costs are paid with Company shares, those shares are recorded at the
estimated fair value at the time the shares are due in accordance with the terms
of the property agreements.
Mineral property exploration costs are expensed as incurred.
When mineral properties are acquired under option agreements with future
acquisition payments to be made at the sole discretion of the Company, those
future payments, whether in cash or shares, are recorded only when the Company
has made or is obliged to make the payment or issue the shares. Because option
payments do not meet the definition of tangible property under EITF 04-2, all
option payments are expensed as incurred.
When it has been determined that a mineral property can be economically
developed as a result of establishing proven and probable reserves and pre
feasibility, the costs incurred to develop such property are capitalized.
Estimated future removal and site restoration costs, when determinable are
provided over the life of proven reserves on a units-of-production basis. Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards. Any charge is included
in exploration expense or the provision for depletion and depreciation during
the period and the actual restoration expenditures are charged to the
accumulated provision amounts as incurred.
As of the date of these financial statements, the Company has incurred only
property option payments and exploration costs which have been expensed.
To date the Company has not established any proven or probable reserves on its
mineral properties.
ASSET RETIREMENT OBLIGATIONS
The Company has adopted the provisions of SFAS No. 143 "Accounting for Asset
Retirement Obligations," which establishes standards for the initial measurement
and subsequent accounting for obligations associated with the sale, abandonment
or other disposal of long-lived tangible assets arising from the acquisition,
construction or development and for normal operations of such assets. The
adoption of this standard has had no effect on the Company's financial position
or results of operations. To February 28, 2007 any potential costs relating to
the ultimate disposition of the Company's mineral property interests have not
yet been determinable.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those 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 income in the period that includes the date of enactment or
substantive enactment. As at February 28, 2007 the Company had net operating
loss carry forwards. However, due to the uncertainty of realization the Company
has provided a full valuation allowance for the deferred tax assets resulting
from these loss carryforwards.
F5
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
NET LOSS PER SHARE
The Company computes loss per share in accordance with SFAS No. 128, "Earnings
per Share" which requires presentation of both basic and diluted earnings per
share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if
their effect is anti-dilutive.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet date. Revenue
and expenses are translated at average rates of exchange during the period.
Related translation adjustments are reported as a separate component of
stockholders' equity, whereas gains or losses resulting from foreign currency
transactions are included in results of operations.
STOCK-BASED COMPENSATION
On March 1, 2006, the Company adopted SFAS No. 123 (revised 2004) (SFAS No.
123R), SHARE-BASED PAYMENT, which addresses the accounting for stock-based
payment transactions in which an enterprise receives employee services in
exchange for (a) equity instruments of the enterprise or (b) liabilities that
are based on the fair value of the enterprise's equity instruments or that may
be settled by the issuance of such equity instruments. In January 2005, the
Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB)
No. 107, which provides supplemental implementation guidance for SFAS No. 123R.
SFAS No. 123R eliminates the ability to account for stock-based compensation
transactions using the intrinsic value method under Accounting Principles Board
(APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and instead
generally requires that such transactions be accounted for using a
fair-value-based method. The Company uses the Black-Scholes-Merton ("BSM")
option-pricing model to determine the fair-value of stock-based awards under
SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company has elected the
modified prospective transition method as permitted by SFAS No. 123R and
accordingly prior periods have not been restated to reflect the impact of SFAS
No. 123R. The modified prospective transition method requires that stock-based
compensation expense be recorded for all new and unvested stock options,
restricted stock, restricted stock units, and employee stock purchase plan
shares that are ultimately expected to vest as the requisite service is rendered
beginning on March 1, 2006. Stock-based compensation expense for awards granted
prior to March 1, 2006 is based on the grant date fair-value as determined under
the pro forma provisions of SFAS No. 123.
Prior to the adoption of SFAS No. 123R, the Company measured compensation
expense for its employee stock-based compensation plans using the intrinsic
value method prescribed by APB Opinion No. 25. The Company applied the
disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE, as if the fair-value-based
method had been applied in measuring compensation expense. Under APB Opinion No.
25, when the exercise price of the Company's employee stock options was equal to
the market price of the underlying stock on the date of the grant, no
compensation expense was recognized.
The Company has not adopted a stock option plan and has not granted any stock
options. Accordingly, no stock-based compensation has been recorded to date.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of SFAS No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of financial
instruments classified as current assets or liabilities approximate their
carrying value due to the short-term maturity of the instruments.
F6
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140", to
simplify and make more consistent the accounting for certain financial
instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", to permit fair value re- measurement for
any hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation, provided that the whole instrument is accounted for on a
fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains
to a beneficial interest other than another derivative financial instrument.
SFAS No. 155 applies to all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. This standard is not expected to have a
significant effect on the Company's future reported financial position or
results of operations.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing liabilities at fair value eliminates the necessity for
entities that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. This adoption of this statement is not
expected to have a significant effect on the Company's future reported financial
position or results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value measurements. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS No. 157 are effective for fair value
measurements made in fiscal years beginning June 1, 2008. The adoption of this
statement is not expected to have a material effect on the Company's future
reported financial position or results of operations.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans." This Statement requires
an employer to recognize the over funded or under funded status of a defined
benefit post retirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through comprehensive
income. SFAS No. 158 is effective for fiscal years ending after December 15,
2006. The Company does not expect that the implementation of SFAS No. 158 will
have any material impact on its financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning June 1, 2008. The Company is currently assessing the impact of SFAS
No. 159 on its financial position and results of operations.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for periods beginning June 1,
2007. The Company is currently evaluating the impact of adopting SAB No. 108 but
does not expect that it will have a material effect on its financial position
and results of operations.
F7
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 3 -MINERAL EXPLORATION PROPERTIES
________________________________________________________________________________
(A) GEORGES LAKE PROPERTY
On October 20, 2006 the Company entered into a "Mineral Property Option
Agreement", with War Eagle Mining Company, Inc., a TSX Venture Exchange company
("War Eagle"). pursuant to which War Eagle has granted the Company the sole and
exclusive option to acquire a 70% undivided interest in and to seven mineral
claims comprising a total of 979 hectares, which are located in the Province of
Saskatchewan, Canada.
In order to exercise its Option the Company is required to incur, or cause to be
incurred, on or before December 31, 2008, expenditures in connection with the
Property of not less than $1,000,000 pursuant to a work program or work programs
commenced and operated by the operator thereon. Upon exercise of the Option, if
any, the parties further interests in and to the property will be determined
through an industry standard joint venture agreement which will be deemed to be
effective upon the exercise of the Option. No cash consideration has been paid
for the option and no costs have been incurred as of February 28, 2007.
(B) SAN JUAN PROPERTY
On November 16, 2006 the Company entered into a "Property Option Agreement" with
Petaquilla Minerals Ltd ("Petaquilla"). Petaquilla therein has granted the
Company the sole and exclusive option to acquire up to a 70% undivided interest
in and to five exploration concessions situated in the Republic of Panama which
are owned and controlled by Petaquilla's wholly-owned subsidiary.
In order to exercise the initial portion of its Option (the "First Option") to
acquire an initial 60% undivided interest in and to the property the Company is
required: (i) to pay to Petaquilla the aggregate sum of $600,000 in cash, as
noted in 1, 3 and 4 below;
(ii) issue Petaquilla 4,000,000 common shares from the treasury of the Company;
and (iii) incur, or cause to be incurred, directly or indirectly, and pay for an
aggregate of $6,000,000 in exploration expenditures as follows:
1. The sum of $100,000 in cash (paid).
2. 4,000,000 common shares of the Company to be issued and delivered to
Petaquilla within five business days from the execution and delivery
of the Option Agreement. On December 1, 2006 the Company issued to
Petaquilla 4,000,000 common shares from the treasury of the Company,
at which time Petaquilla became a significant shareholder of the
Company. The estimated fair value of the 4,000,000 shares was
$7,400,000 and has been recorded as mineral property expenditures and
included in operating results for the period ended February 28, 2007.
3. An additional $200,000 in cash to be paid by wire transfer, and
exploration expenditures of not less than $1,000,000 to be incurred
and paid, both on or before May 31, 2007. An additional $300,000 in
cash to be paid by wire transfer, and exploration expenditures of not
less than $3,000,000 to be incurred and paid, both on or before May
31, 2008.
4. Cumulative exploration expenditures of not less than $6,000,000 to be
incurred and paid on or before May 31, 2009. Subject to the prior
exercise of the First Option, and in accordance with the terms and
conditions of the Option Agreement, Petaquilla has therein also
granted to the Company the exclusive right and further option (the
"Second Option") to increase the Company's undivided interest in the
property from 60% to 70% by incurring and paying for an additional
$3,000,000 in exploration expenditures during the period between
exercise of the First Option and May 31, 2010.
5. During the term of the Option Agreement Petaquilla is entitled to
nominate up to 40% of the total number of directors of the Company.
6. In addition, the Company is to establish a stock option plan which
allocates not less than 15% of the then issued shares in the capital
of the Company for the granting of options and shall grant to
Petaquilla, or its nominees stock options equal in number to not less
than one-third of the number of options allocated under such plan.
On January 30, 2007 the Company was alerted to a news release from Petaquilla
Minerals Ltd. that it had resolved to rescind its Property Option Agreement with
the Company. The Company has disputed the alleged rescission and advised
Petaquilla that the Option is in good standing. Consequently, on February 13,
2007 the Company in accordance with the provisions of the Agreement, and as a
consequence of Petaquilla's purported rescission of the Agreement, filed a
notice with the British Columbia International Commercial Arbitration Centre
seeking arbitration. On March 5, 2007 the Company filed its Statement of Claim
with the arbitrators seeking specific performance of the Agreement and damages.
On April 10, 2007 Petaquilla filed a Statement of Defence. The parties are
awaiting formal arbitration proceedings and accordingly the outcome of the
arbitration is presently not determinable.
F8
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 3 -MINERAL EXPLORATION PROPERTIES (CONTINUED)
________________________________________________________________________________
(C) VILCORO GOLD PROPERTY
On February 23, 2007, the Company entered into a Property Option Agreement with
St. Elias Mines Ltd., a publicly traded company on the TSX-V exchange, to
acquire not less than an undivided 66% legal, beneficial and registrable
interest in certain mining leases in Peru comprised of approximately 600
hectares in Peru.
Under the terms of the Property Option Agreement, and in order to exercise its
Option to acquire the properties, the Company is required to make the following
non-refundable cash payments to St. Elias totaling $350,000 in the following
manner:
1. Payment of $50,000 in cash (paid)
2. The second payment of $100,000 is due on or before the twelve-month
anniversary of the signing of the Property Option Agreement.
3. The third payment of $200,000 cash and 50,000 shares of the Company's
common stock are due on or before the twenty-fourth-month anniversary
of the signing of the Property Option Agreement.
The Company is also required to incur costs totaling $2,500,000 as follows:
1. expenditures of $500,000 are to be incurred on or before the
twelve-month anniversary of the signing of the Property Option
Agreement. This amount has been accrued as an Agreement Payable in the
period.
2. expenditures of $750,000 are to be incurred on or before the
twenty-forth-month anniversary of the signing of the Property Option
Agreement; and
3. expenditures of $1,250,000 are to be incurred on or before the
thirty-sixth-month anniversary of the signing of the Property Option
Agreement.
Also under the terms of the Property Option Agreement, St. Elias will be the
operator of the properties and will receive an 8% operator fee on all
exploration expenditures. Once the Company exercises the Option, the Company
agrees to pay 100% of all on-going exploration, development and production costs
until commercial production and the Company has the right to receive 100% of any
cash flow from commercial production of the properties until it has recouped its
production costs, after which the cash flow will be allocated 66% to the Company
and 34% to St. Elias.
NOTE 4 - STOCKHOLDERS' EQUITY
________________________________________________________________________________
The Company's capitalization is 200,000,000 common shares with a par value of
$0.001 per share. On January 12, 2007 shareholder consented to increase the
authorized share capital of the Company from 50,000,000 shares of common stock
to 200,000,000 shares of common stock with the same par value of $0.001 per
share.
On May 1, 2006, a majority of shareholders and the directors of the Company
approved a special resolution to undertake a forward stock split of the common
stock of the Company on a 42 new shares for 1 old share basis whereby 16,400,000
common shares were issued pro-rata to shareholders of the Company as of the
record date on May 1, 2006.
On September 27, 2006 four founding shareholders returned 7,500,000 (pre - 4:1
Forward Split) of their restricted founders' shares, previously issued at
$0.0016 - $0.009 (pre - 4:1 Forward Split) per share, to treasury and the shares
were subsequently cancelled by the Company. The shares were returned to treasury
for no consideration to the founding shareholders.
On October 13, 2006, a majority of the Board of Directors approved by way of a
stock dividend to undertake a forward stock split of the common stock of the
Company on a 4 new shares for 1 old share basis whereby 27,900,000 common shares
were issued pro-rata to shareholders of the Company as of October 13, 2006.
All references in these financial statements to number of common shares, price
per share and weighted average number of common shares outstanding prior to the
42:1 forward split and the 4:1 forward split have been adjusted to reflect these
stock splits on a retroactive basis, unless otherwise noted.
F9
GENEVA RESOURCES, INC.
(FORMERLY GENEVA GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
________________________________________________________________________________
NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
________________________________________________________________________________
On December 1, 2006 the Company issued 4,000,000 common shares in connection
with a Property Option Agreement. The Company has recorded $7,400,000 as being
the estimated fair value of the shares. (Refer to Note 3 (b)).
To February 28, 2007 the Company has not granted any stock options and has not
recorded any stock-based compensation.
NOTE 5 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________
A company which is owned by a significant shareholder of the Company was owed
$16,799 for consulting and sub-contracts on land stabilization programs which
were provided in the year ended May 31, 2005. On November 15, 2006 the amount
was waived by the shareholder and has been recorded as a recovery of consulting
fees. The amount payable was unsecured, non-interest bearing and had no set
terms of repayment.
Other related party transactions are disclosed in Note 3.
NOTE 6 - SHAREHOLDER'S LOAN
________________________________________________________________________________
On November 14, 2006 a significant shareholder of the Company advanced $100,000
to Petaquilla on behalf of the Company (Refer to Note 3). Additional advances of
$85,000 were received during the period ended February 28, 2007. These amounts
are unsecured, bear interest at 10% per annum, and have no set terms of
repayment. The total amount outstanding as of February 28, 2007 including
accrued interest is $188,126. Subsequent to the period an additional $121,000
was advanced by the same shareholder under the same terms and conditions.
F10
Statements made in this Form 10-QSB that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use of terms such as "may," "will," "expect," "believe," "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such forward-looking statements be subject to the safe harbors for such
statements. We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond our control that could cause actual
results and events to differ materially from historical results of operations
and events and those presently anticipated or projected. We disclaim any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
GENERAL
Geneva Resources, Inc. is a corporation organized under the laws of the State of
Nevada on April 5, 2004 originally under the name of Revelstoke Industries, Inc.
(herein known as "we", "our", "us" or the "Company"). Our shares of common stock
trade on the Over-the-Counter Bulletin Board under the symbol "GVRS".
CHANGE IN CORPORATE NAME
On February 28, 2007, we filed an amendment to our Articles of Incorporation
(the "2007 Amendment"). In accordance with the 2007 Amendment, on March 1, 2007,
we effectuated a merger with our wholly-owned subsidiary, Geneva Resources,
Inc., and changed our name to "Geneva Resources, Inc." Our Board of Directors
pursuant to minutes of written consent in lieu of a special meeting approved the
merger and corresponding name change to Geneva Resources, Inc. Shareholder
approval was not required under the Nevada Revised Statutes. In connection with
the name change to Geneva Resources, Inc., as of the open of business on March
5, 2007, our trading symbol changed to "GVRS". See " - Articles of Merger"
below.
INCREASE IN AUTHORIZED CAPITAL STRUCTURE
On January 12, 2007, we filed an Amendment to our Articles of Incorporation (the
"2006 Amendment"). In accordance with the Amendment, we increased our authorized
capital from 50,000,000 shares of common stock to 200,000,000 shares of common
stock with the same par value of $0.001 per share. On November 27, 2006, our
Board of Directors pursuant to minutes of written consent in lieu of a special
meeting authorized and approved the Amendment to increase our authorized capital
and the dissemination of a notice of consent requested from shareholders without
a special meeting dated December 4, 2006 (the "Notice of Consent") together with
a consent/proxy card (the "Proxy"). The Notice of Consent was distributed to our
shareholders with a record date of November 27, 2006. Our Board of Directors
fixed the close of business on January 3, 2007 as the date by which written
consents and approvals were to be received by our shareholders holding a
majority of the total issued and outstanding common stock to approve the
Amendment. See "Part II. Item 4. Submission of Matters to a Vote of Security
Holders."
2
ARTICLES OF MERGER
2007 ARTICLES OF MERGER
On February 28, 2007, we filed Articles of Merger with the Nevada Secretary of
State (the "2007 Articles of Merger"). In accordance with the terms and
provisions of the Articles of Merger: (i) we effectuated a merger with our
wholly-owned subsidiary, Geneva Resources, Inc., as a parent/subsidiary merger,
whereby we were the surviving corporation; (ii) the merger became effective
March 1, 2007 pursuant to Section 92A,180 of the Nevada Revised Statutes; and
(iii) our Articles of Incorporation were amended to change our name to "Geneva
Resources, Inc."
We decided to change our name to Geneva Resources, Inc. to better reflect our
additional resource acquisition and development business resulting from our
recent acquisition of certain options to interests in certain mineral
properties. See " - Current Business Operations" below.
2006 ARTICLES OF MERGER
On November 27, 2006, we filed Articles of Merger with the Nevada Secretary of
State (the "Articles of Merger"). In accordance with the terms and provisions of
the Articles of Merger: (i) we effectuated a merger with our wholly-owned
subsidiary, Geneva Gold Corp., as a parent/subsidiary merger, whereby we were
the surviving corporation; (ii) the merger became effective as of December 1,
2006 pursuant to Section 92A.180 of the Nevada Revised Statutes; and (iii) our
Articles of Incorporation were amended to change our name to "Geneva Gold
Corp.".
OCTOBER 16, 2006 FORWARD STOCK SPLIT
On October 13, 2006, our Board of Directors pursuant to minutes of written
consent in lieu of a special meeting authorized and approved a forward stock
split of four for one (4:1) of our total issued and outstanding shares of common
stock (the "October 2006 Forward Stock Split").
The October 2006 Forward Stock Split was effectuated based on market conditions
and upon a determination by our Board of Directors that the October 2006 Forward
Stock Split was in our best interests and of the shareholders. In our judgment
the October 2006 Forward Stock Split will result in an increase in our trading
float of shares of common stock available for sale resulting in facilitation of
investor liquidity and trading volume potential. The intent of the October 2006
Forward Stock Split is to increase the marketability of our common stock.
The October 2006 Forward Stock Split was effectuated with a record date of
October 13, 2006 upon filing the appropriate documentation with NASDAQ. The
October 2006 Forward Stock Split increased our issued and outstanding shares of
common stock from 9,300,000 to approximately 37,200,000 shares of common stock.
(The total number of shares of common stock issued and outstanding had
previously been 16,800,000 since May 1, 2006 pursuant to the May 2006 Forward
Stock Split. However, on September 27, 2006, four of our shareholders consented
to the cancellation and return to treasury of an aggregate of 7,500,000 shares
thus bringing the total number of issued and outstanding shares of common stock
to 9,300,000 as of October 13, 2006.) The current authorized share capital
continued to be 50,000,000 shares of common stock with a par value of $0.001 per
share.
3
MAY 1, 2006 FORWARD STOCK SPLIT
On May 1, 2006, our Board of Directors pursuant to minutes of written consent in
lieu of a special meeting authorized and approved a forward stock split of
forty-two (42) for one of our total issued and outstanding shares of common
stock (the "May 2006 Forward Stock Split").
The May 2006 Forward Stock Split was effectuated based on market conditions and
upon a determination by our Board of Directors that the May 2006 Forward Stock
Split was in our best interests and of the shareholders. In our judgment the May
2006 Forward Stock Split will result in an increase in our trading float of
shares of common stock available for sale resulting in facilitation of investor
liquidity and trading volume potential. The intent of the May 2006 Forward Stock
Split is to increase the marketability of our common stock.
The May 2006 Forward Stock Split was effectuated with a record date of May 1,
2006 upon filing the appropriate documentation with NASDAQ. The May 2006 Forward
Stock Split increased our issued and outstanding shares of common stock from
400,000 to approximately 16,800,000 shares of common stock. The current
authorized share capital continued to be 50,000,000 shares of common stock with
a par value of $0.001 per share.
CURRENT BUSINESS OPERATIONS
We are currently engaged in the business of exploration of precious metals with
a focus on the exploration and development of gold deposits in North American
and internationally. As of the date of this Quarterly Report, our mineral
interests consist mainly of options agreements on exploration stage properties
as discussed below. We have not established any proven or probable reserves on
our mineral property interests.
VILCORO GOLD PROPERTY
On January 22, 2007, we entered into a letter of intent with St. Elias Mines
Ltd. ("St Elias"), pursuant to which St. Elias proposed to grant to us an option
to acquire not less than an undivided 66% legal, beneficial and registerable
interest in certain mining leases in Peru including St. Elias' option to earn a
95% interest in the Vilcoro Gold Property project comprised of approximately 600
hectares in Peru (collectively, the Vilcoro Properties").
On February 23, 2007, we entered into a formal property option agreement ("the
"Vilcoro Option Agreement") with St. Elias pursuant to which St. Elias granted
to us an option to acquire not less than the undivided 66% legal, beneficial and
registerable interest in the Vilcoro Properties (the "Vilcoro Option").
Under the terms of the Vilcoro Option Agreement and in order to exercise the
Vilcoro Option, we are required to make the following non-refundable cash
payments to St. Elias aggregating $350,000 as follows: (i) $50,000 within five
business days from the execution of the Vilcoro Option Agreement, which as of
the date of this Quarterly Report, has been paid; (ii) $100,000 due on or before
the 12-month anniversary of execution of the Vilcoro Option Agreement; and (iii)
$200,000 due on or before the 24-month anniversary of execution of the Vilcoro
Option Agreement.
4
In accordance with the terms and provisions of the Vilcoro Option Agreement, we
are further required to: (i) issue to St. Elias 50,000 shares of our restricted
common stock on or before the 12-month anniversary of execution of the Vilcoro
Option Agreement; and (ii) incur costs totally $2,5000,000 as follows: (a) first
expenditure of $500,000 are to be incurred on or before the 12-month anniversary
of execution of the Vilcoro Option Agreement, (b) second expenditure of $750,000
are to be incurred on or before the 24-month anniversary of execution of the
Vilcoro Option Agreement; and (iii) third expenditure of $1,250,000 are to be
incurred on or before the 36-month anniversary of execution of the Vilcoro
Option Agreement. Under further terms of the Vilcoro Option Agreement: (i) St.
Elias will be the operator of the Vilcoro Properties and will receive an 8%
operator fee on all exploration expenditures; (ii) once we exercise the Vilcoro
Option, we agree to pay 100% of all on-going exploration, development and
production costs until commercial production (the "Production Costs"); and (iii)
we have the right to receive 100% of any cash flow from commercial production of
the Vilcoro Properties until we have recouped the Production Costs after which
the cash flow will be allocated 66% to us and 34% to St. Elias.
GEORGE LAKE PROPERTY
On approximately October 20, 2006, we entered into a mineral property option
agreement (the "George Lake Option Agreement") with War Eagle Mining Company
("War Eagle"). In accordance with the terms and provisions of the George Lake
Option Agreement: (i) War Eagle granted to us the sole and exclusive option (the
"Option") to acquire a 70% undivided interest in and to seven mineral claims
comprising a total of 979 hectares located in the Province of Saskatchewan,
Canada; (ii) in order to exercise the Option, we are required to incur or cause
to be incurred on or before December 31, 2008 expenditures in connection with
the George Lake Property of not less than $1,000,000 pursuant to a work program
to be commenced and operated by the operator thereon; and (iii) upon exercise of
the Option, the further interests of the parties in and to the George Lake
Property will be determined through an industry standard joint venture
agreement, which will be deemed to be effective upon the exercise of the Option.
AS of the date of this Quarterly Report, we have not incurred any expenditures.
SAN JUAN PROPERTY
On approximately November 16, 2006, we entered into a property option agreement
(the "Petaquilla Option Agreement") with Petaquilla Minerals Ltd.
("Petaquilla"). In accordance with the terms and provisions of the Petaquilla
Option Agreement, Petaquilla granted to us the sole and exclusive option (the
"Option") to acquire up to a 70% undivided interest in and to five exploration
concessions situated in the Republic of Panama (the "San Juan Property"), which
are owned and controlled by Petaquilla's wholly-owned Panamanian subsidiary.
FIRST OPTION
In order to exercise the initial portion of the Option to acquire an initial 60%
undivided interest in and to the San Juan Property (the "First Option"), we are
required to: (i) pay to Petaquilla the aggregate sum of $600,000 (of which
$100,000 was paid on approximately November 17, 2006); (ii) issue to Petaquilla
4,000,000 shares of our restricted common stock (which 4,000,000 shares were
issued as of December 1, 2006); and (iii) incur or cause to be incurred directly
or indirectly and pay for an aggregate of $6,000,000 in cumulative exploration
expenditures as follows: (a) the sum of $100,000, which has been paid to
Petaquilla); (b) issue 4,000,000 shares of restricted common stock, which have
been issued to Petaquilla; (c) payment of an additional $200,000 and incurrence
5
and payment of exploration expenditures of not less than $1,000,000 on or before
May 31, 2007; (d) payment of an additional $300,000 and incurrence and payment
of exploration expenditures of not less than $3,000,000 on or before May 31,
2008; and (e) incurrence and payment of cumulative exploration expenditures of
not less than $6,000,000 on or before May 31, 2009. See " - Results of
Operation" and "Part II. Item 2. Changes in Securities and Use of Proceeds."
As of December 1, 2006, we have satisfied our current obligations with respect
to the exercise of the First Option under the Petaquilla Option Agreement to
acquire an initial 60% undivided interest in and to the San Juan Property.
SECOND OPTION
Subject to the prior exercise of the First Option and in accordance with the
terms and conditions of the Petaquilla Option Agreement, Petaquilla has granted
to us the exclusive right and further portion of the Option (the "Second
Option") to increase our undivided interest in and to the San Juan Property from
60% to 70% by incurring and paying for $3,000,000 in exploration expenditures
during the period between the delivery of the Notice of Election and May 31,
2010. Within sixty (60) days following the exercise of the First Option, we are
required to give Petaquilla notice (the Notice of Election) that either: (i) we
elect to accept the grant of the Second Option; or (ii) we elect not to accept
the Second Option. If we make the election, then all further work on the San
Juan Property and the subsequent relationship between us and Petaquilla shall be
governed by a joint venture agreement between the parties. If we elect to accept
the grant of the Second Option but fail to exercise the Second Option, we and
Petaquilla shall have initial interests of 60% and 40%, respectively. We shall
be deemed to have exercised the Second Option and thus acquired a 70% undivided
interest in the San Juan Property by having incurred and paid for $3,000,000 in
exploration expenditures during the period between the delivery of the Notice of
Election and May 31, 2010. If we fail to incur the $3,000,000 in exploration
expenditures by the end of the last day, we may at any time within fifteen days
of such day make a cash payment to Petaquilla in an amount equal to the
deficiency in the $3,000,000 exploration expenditures to be incurred.
On January 30, 2007, we received notice pursuant to a news release from
Petaquilla that the board of directors of Petaquilla has resolved to rescind the
Petaquilla Option Agreement. We are current in our obligations under the
Petaquilla Option Agreement and dispute the alleged rescission and advised
Petaquilla that the Option is in good standing. Consequently, on February 13,
2007, in accordance with the provisions of the Petaquilla Option Agreement as as
a result of Petaquilla's purported rescission of the Petaquilla Option
Agreement, we filed a notice with the British Columbia International Commercial
Arbitration Center seeking arbitration. See "Part II. Item 1. Legal
Proceedings."
RESULTS OF OPERATION
NINE-MONTH PERIOD ENDED FEBRUARY 28, 2007 COMPARED TO NINE-MONTH PERIOD ENDED
FEBRUARY 28, 2006.
Our net loss for the nine-month period ended February 28, 2007 was approximately
($7,773,003) compared to a net loss of ($35,920) during the nine-month period
ended February 28, 2006 (an increase of $7,737,083).
During the nine-month periods ended February 28, 2007 and 2006, we did not
generate any revenue. During the nine-month period ended February 28, 2007, we
incurred general and administrative expenses in the aggregate amount of
6
$7,773,003 compared to general and administrative expenses incurred during the
nine-month period ended February 28, 2006 of $45,579. Administrative expenses
incurred during the nine-month period ended February 28, 2007 primarily
consisted of: (i) professional fees of $125,161 (2006: $21,833); (ii) office and
general expenses of $45,579 (2006: $5,927); (iii) mineral property expenditures
of $7,550,000 (2006: $-0-); and (iv) consulting fees of $52,263 (2006: $8,160).
General and administrative expenses increased during the nine-month period ended
February 28, 2007 due to the incurrence of mineral property expenditures
relating primarily to the Petaquilla Option Agreement based upon the estimated
fair market value of the 4,000,000 shares of restricted common stock issued to
Petaquilla and the increase in professional fees resulting from the increase in
overall business operations and activity. General and administrative expenses
generally include corporate overhead, financial and administrative contracted
services, marketing, and consulting costs.
As discussed above, the increase in net loss during the nine-month period ended
February 28, 2007 compared to the nine-month period ended February 28, 2006 is
attributable primarily to the increase in general and administrative expenses
relating to the mineral property expenditures incurred. Our net loss during the
nine-month period ended February 28, 2007 was approximately ($7,773,003) or
($0.20) per share compared to a net loss of ($35,920) or ($0.00) during the
nine-month period ended February 28, 2006. The weighted average number of shares
outstanding was 38,504,029 for the nine-month period ended February 28, 2007
compared to 37,200,000 for the nine-month period ended February 28, 2006.
THREE-MONTH PERIOD ENDED FEBRUARY 28, 2007 COMPARED TO THREE-MONTH PERIOD ENDED
FEBRUARY 28, 2006.
Our net loss for the three-month period ended February 28, 2007 was
approximately ($161,186) compared to a net loss of ($8,192) during the
three-month period ended February 28, 2006 (an increase of $152,994).
During the three-month periods ended February 28, 2007 and 2006, we did not
generate any revenue. During the three-month period ended February 28, 2007, we
incurred general and administrative expenses in the aggregate amount of $161,186
compared to general and administrative expenses incurred during the three-month
period ended February 28, 2006 of $8,192. Administrative expenses incurred
during the three-month period ended February 28, 2007 primarily consisted of:
(i) professional fees of $54,927 (2006: $3,050); (ii) office and general
expenses of $29,697 (2005: $2,306); (iii) mineral property expenditures of
$50,000 (2005: $-0-); and (iv) consulting fees of $26,562 (2005: $2,836).
General and administrative expenses increased during the three-month period
ended February 28, 2007 due to the incurrence of mineral property expenditures
relating to the Petaquilla Option Agreement and the increase in professional
fees resulting from the increase in overall business operations and activity.
As discussed above, the increase in net loss during the three-month period ended
February 28, 2007 compared to the three-month period ended February 28, 2006 is
attributable primarily to the increase in overall general and administrative
expenses. Our net loss during the three-month period ended February 28, 2007 was
approximately ($161,186) or ($0.00) per share compared to a net loss of ($8,192)
or ($0.00) during the three-month period ended February 28, 2006. The weighted
average number of shares outstanding was 41,155,556 for the three-month period
ended February 28, 2007 compared to 35,706,720 for the three-month period ended
February 28, 2006.
7
LIQUIDITY AND CAPITAL RESOURCES
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation.
NINE-MONTH PERIOD ENDED FEBRUARY 28, 2007
As of the nine-month period ended February 28, 2007, our current assets were
$15,230 and our current liabilities were $350,820, which resulted in a working
capital deficit of $355,590. As of the nine-month period ended February 28,
2007, our total assets consisted of the $15,230 in cash. As of the nine-month
period ended February 28, 2007, our total liabilities consisted of: (i) $162,694
in accounts payable and accrued liabilities; and (ii) $188,126 in shareholders'
loan.
Stockholders' equity (deficit) decreased from $37,413 at fiscal year ended May
31, 2006 to ($335,590) as at February 28, 2007.
We have not generated positive cash flows from operating activities. For the
nine-month period ended February 28, 2007, net cash flows used in operating
activities was ($243,153) compared to net cash flows used in operating
activities for the nine-month period ended February 28, 2006 of ($83,928). Net
cash flows used in operating activities for the nine-month period ended February
28, 2007 consisted primarily of a net loss of ($7,773,003). Net cash flows used
in operating activities was adjusted by $7,400,000 to reflect the non-cash
mineral property expenditures associated with the Petaquilla Option Agreement
based upon the estimated fair market value of the 4,000,000 shares of restricted
common stock issued to Petaquilla and by $143,523 to reflect the increase in
accounts payable and accrued liabilities.
For the nine-month period ended February 28, 2007, net cash flows provided by
financing activities was $185,000 compared to net cash flows provided by
financing activities for the nine-month period ended February 28, 2006 of
$100,000. Net cash flows provided by financing activities for the nine-month
period ended February 28, 2007 consisted of proceeds from shareholder advances.
PLAN OF OPERATION
During fiscal year ended May 31, 2006, we closed a private placement offering
pursuant to which we issued an aggregate of 4,200,000 shares of common stock
(100,000 pre-May 2006 Forward Stock Split shares) at $0.0238 per share for gross
proceeds of $100,000. Existing working capital, further advances and possible
debt instruments, anticipated warrant exercises, further private placements, and
anticipated cash flow are expected to be adequate to fund our operations over
the next six months. We have no lines of credit or other bank financing
arrangements. Generally, we have financed operations to date through the
proceeds of the private placement of equity and debt securities. In connection
with our business plan, management anticipates that administrative expenses will
decrease as a percentage of revenue as our revenue increases over the next
twelve months.
Additional issuances of equity or convertible debt securities will result in
dilution to our current shareholders. Further, such securities might have
rights, preferences or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, we may not be
8
able to take advantage of prospective new business endeavors or opportunities,
which could significantly and materially restrict our business operations.
The report of the independent registered public accounting firm that accompanies
our fiscal year end May 31, 2006 and May 31, 2005 audited financial statements
contains an explanatory paragraph expressing substantial doubt about our ability
to continue as a going concern. The financial statements have been prepared
"assuming that we will continue as a going concern," which contemplates that we
will realize our assets and satisfy our liabilities and commitments in the
ordinary course of business.
MATERIAL COMMITMENTS
As of the date of this Quarterly Report, we do not have any significant material
commitments for fiscal year 2006/2007 other than the contractual arrangements
described below.
VILCORO OPTION AGREEMENT
Under the terms of the Vilcoro Option Agreement and in order to exercise the
Vilcoro Option, we are required to make the following non-refundable cash
payments to St. Elias aggregating $350,000 as follows: (i) $50,000 within five
business days from the execution of the Vilcoro Option Agreement which, as of
the date of this Quarterly Report, has been paid; (ii) $100,000 due on or before
the 12-month anniversary of execution of the Vilcoro Option Agreement; and (iii)
$200,000 due on or before the 24-month anniversary of execution of the Vilcoro
Option Agreement. In accordance with further terms and provisions of the Vilcoro
Option Agreement, we are further required to incur costs totally $2,5000,000 as
follows: (a) first expenditure of $500,000 to be incurred on or before the
12-month anniversary of execution of the Vilcoro Option Agreement, (b) second
expenditure of $750,000 to be incurred on or before the 24-month anniversary of
execution of the Vilcoro Option Agreement; and (iii) third expenditure of
$1,250,000 to be incurred on or before the 36-month anniversary of execution of
the Vilcoro Option Agreement.
PETAQUILLA OPTION AGREEMENT
Under the terms of the Petaquilla Option Agreement, we are required to: (i) pay
to Petaquilla the aggregate sum of $600,000 (of which $100,000 was paid on
approximately November 17, 2006); and (ii) incur or cause to be incurred
directly or indirectly and pay for an aggregate of $6,000,000 in cumulative
exploration expenditures as follows: (a) the sum of $100,000, which has been
paid to Petaquilla); (b) issue 4,000,000 shares of restricted common stock,
which have been issued to Petaquilla; (c) payment of an additional $200,000 and
incurrence and payment of exploration expenditures of not less than $1,000,000
on or before May 31, 2007; (d) payment of an additional $300,000 and incurrence
and payment of exploration expenditures of not less than $3,000,000 on or before
May 31, 2008; and (e) incurrence and payment of cumulative exploration
expenditures of not less than $6,000,000 on or before May 31, 2009.
SHAREHOLDER LOAN
On November 14, 2006, one of our shareholders advanced to Petaquilla an
aggregate of $100,000 on our behalf. The aggregate amount loaned to us of
$100,000 is unsecured and accrues interest at 10% per annum and has no
established terms of repayment. As of the date of this Quarterly Report, we owe
an aggregate of $100,438 in principal and accrued interest. Subsequent to the
nine-month period ended February 28, 2007, an additional $121,000 was advanced
to us by the same shareholder under the same terms and conditions.
9
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any 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 investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have: (i) any obligation arising under a guaranteed contract, derivative
instrument or variable interest; or (ii) a retained or contingent interest in
assets transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.
ITEM III. CONTROLS AND PROCEDURES
An evaluation was conducted under the supervision and with the participation of
our management, including our President/Chief Executive Officer and our
Treasurer/Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as at February 28, 2007.
Based on that evaluation, we have concluded that our disclosure controls and
procedures were effective as of such date to ensure that information required to
be disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized
and reported within the time periods specified in Commission rules and forms.
Such officers also confirm that there was no change in our internal control over
financial reporting during the nine-month period ended February 28, 2007 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
AUDIT COMMITTEE REPORT
The Board of Directors has established an audit committee. The members of the
audit committee are Mr. Marcus Johnson, Mr. Steven Jewett and Mr. Alan Sedgwick.
Two of the three members of the audit committee are "independent" within the
meaning of Rule 10A-3 under the Exchange Act. The audit committee was organized
on October 20, 2006 and operates under a written charter adopted by our Board of
Directors.
The audit committee has reviewed and discussed with management our unaudited
financial statements as of and for the nine-month period ended February 28,
2007. The audit committee has also discussed with Dale Matheson Carr-Hilton
LaBonte LLP the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended, by the
Auditing Standards Board of the American Institute of Certified Public
Accountants. The audit committee has received and reviewed the written
disclosures and the letter from Dale Matheson Carr-Hilton LaBonte LLP required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, as amended, and has discussed with Dale Matheson Carr-Hilton
LaBonte LLP their independence.
Based on the reviews and discussions referred to above, the audit committee has
recommended to the Board of Directors that the unaudited financial statements
referred to above be included in our Quarterly Report on Form 10-QSB for the
nine-month period ended February 28, 2007 filed with the Securities and Exchange
Commission.
10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 27, 2007, we received notice pursuant to a news release from
Petaquilla that the board of directors of Petaquilla resolved to rescind the
Petaquilla Option Agreement. We are current in our obligations under the
Petaquilla Option Agreement and dispute the alleged rescission and have advised
Petaquilla that the Option is in good standed.
Therefore, in accordance with the terms and provisions of the Petaquilla Option
Agreement, we filed a notice with the British Columbia International Commercial
Arbitration Centre (the "BCICAC") seeking arbitration. On March 5, 2007, we
filed a Statement of Claim with the BCICAC seeking specific performance of the
Petaquilla Option Agreement and damages. On April 10, 2007, Petaquilla filed a
Statement of Defense.
We have instructed counsel to vigorously pursue all claims against Petaquilla on
our behalf. As of the date of this Quarterly Report, we are awaiting formal
arbitration proceedings and accordingly the outcome of the arbitration is
presently not determinable. While the result of arbitration is difficult to
predict, we believe we have a significant likelihood of prevailing or
successfully pursuing our claims against Petaquilla.
Other than as disclosed above, management is not aware of any legal proceedings
contemplated by any governmental authority or any other party involving us or
our properties. As of the date of this Quarterly Report, no director, officer or
affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an
adverse interest to us in any legal proceedings. Management is not aware of any
other legal proceedings pending or that have been threatened against us or our
properties.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
PETAQUILLA MINERALIS LTD.
On December 1, 2006, we issued an aggregate of 4,000,000 shares of our
restricted common stock in accordance with the terms and provisions of the San
Juan Option Agreement. The shares were issued pursuant to an exemption from
registration under Section 4(2) and Rule 903 of Regulation S of the 1933
Securities Act.
CANCELLATION OF SHARE CERTIFICATES
On approximately September 27, 2006, four of our founding shareholders returned
an aggregate of 7,500,000 shares of restricted common stock held of record to
treasury. Pursuant to board of director written consent and approval, we
subsequently cancelled the 7,500,000 shares of restricted common stock. The
7,500,000 shares of common stock were returned to treasury for no consideration
to the four shareholders in order to make our share capital more attractive to
potential investors.
11
PRIVATE SALE/ACQUISITION
On December 28, 2006, Marcus Johnson, our President and a member of the Board of
Directors, purchased an aggregate of 6,500,000 shares of our restricted common
stock in a series of private sales at par value of $0.001 per share for total
consideration of $6,500 from his personal funds. As of the date of this
Quarterly Report, there are an aggregate of 41,200,000 shares of our common
stock issued and outstanding. Therefore, Mr. Johnson holds of record an
aggregate 15.8% equity interest.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 27, 2006, our Board of Directors pursuant to minutes of written
consent in lieu of a special meeting authorized and approved an amendment to the
Articles of Incorporation (the "2006 Amendment") to increase our authorized
capital from 50,000,000 shares of common stock to 200,000,000 shares of common
stock with the same par value of $0.001 per share and the dissemination of a
notice of consent requested from shareholders without a special meeting dated
December 4, 2006 (the "Notice of Consent") together with a consent/proxy card
(the "Proxy"). Our Board of Directors fixed the close of business on January 3,
2007 as the date by which the Proxy was to be received by us.
Only shareholders of record at the close of business on November 27, 2006 (the
"Record Date") were entitled to receipt of the Notice of Consent and to vote the
shares of common stock held by them on such date in the Proxy. As of the Record
Date, an aggregate 37,200,000 shares of common stock were issued and
outstanding. There was no other class of voting securities outstanding at that
date. Each share of common stock held by a shareholder entitled such shareholder
to one vote pursuant to the Proxy. The receipt of Proxies evidencing an
affirmative vote of the holders of a majority of the outstanding shares of
common stock was required to approve the 2006 Amendment.
Approval that the Articles of Incorporation be amended to increase the
authorized capital of the Company from 50,000,000 shares of common stock to
200,000,000 shares of common stock with the same par value of $0.001 per share.
For 21,946,655
Against -0-
Abstain 15,253,345
ITEM 5. OTHER INFORMATION
APPOINTMENT/RESIGNATION OF DIRECTOR
Effective on October 20, 2006, our Board of Directors accepted the consent to
act as a director from Terence F. Schorn. On February 7, 2007, we accepted the
resignation from Mr. Schorn as a member of our Board of Directors.
Effective on February 7, 2007, our Board of Directors accepted the consent to
act as a director from Stacey Kivel, Attorney at Law. The following is a brief
account of the education and business experience of Ms. Kivel during at least
the past five years, indicating her principal occupation during the period, and
the name and principal business of the organization by which she was employed.
12
Ms. Kivel's previous experience involves her role as general council,
particularly in the areas of corporate finance, international mining,
acquisitions,, government and investor relations, corporate governance,
intellectual property, media and communications. She is also a specialist on
Africa and Middle East government relations. Ms. Kivel has performed as vice
president business development and legal affairs as well as company secretary
for a junior oil and gas exploration and production company listed on the London
Stock Exchange (AIM) with drilling operations in West Africa. In acting as the
firm's lead on corporate development, she assisted in all areas required to
build the company's asset base, financial backing and corporate structure. This
included negotiating agreements and overseeing corporate relations with host
governments in West Africa whilst maintaining the internal structure of this
listed company. Ms. Kivel successfully assisted the company through a bidding
and lobbying exercise to acquire oil exploration rights in Nigeria. She
subsequently helped negotiate production sharing contracts and joint operating
agreements for the acquisition of some of the most sought after oil and gas
exploration assets in Nigeria, the cost of which were in the hundreds of
millions of dollars. She assisted in structuring two private placements totaling
US $310,000 and a bridge financing for US $65,000,000 which provided finance for
the company's expansion. At the same time she was responsible as corporate
secretary and head of legal for the company's compliance, their listing,
corporate governance, human resources, board structure and legal records.
Ms. Kivel has been advising companies on corporate development and expansion
into Africa and the Middle East for more than ten years and has developed a
network of government leaders and corporate executives working and investing in
these regions. Her career has involved a wide range of public and private
corporate transactions dealing with individual companies and governments around
the world. These range from brokering the sale of a distressed German
multinational company in 2005 to expanding opportunities for London-based Rotch
Group's (now Consensus) international expansion.
In June 2000 to 2003 she acted as special advisor to the President for the
Republic of Gabon. Ms. Kivel advised the office of the President of the
Republic, the Gabon Ministry of Finance and Air Gabon on a strategy to obtain
offset credits as a result of the purchase of new Boeing aircraft.
Ms. Kivel began her career as a corporate attorney specializing in intellectual
property and acquisitions in the entertainment industry. She acted as general
council and head of acquisitions for two California-based firm distributors, one
of which she helped grow to a $100 million entity, specializing in negotiating
distribution and finance agreements to acquire international film and television
distribution rights. She subsequently headed the International Government
Relations and Business Development department for the Middle East and Africa at
Instructional Investor Magazine. Following this, she consulted in the same area
for the International Herald Tribune, significantly increasing the international
customer base for both the publications.
Ms. Kivel graduated from Pepperdine University School of Law in Malibu
California and subsequently became an accredited member of the California Bar.
She received her undergraduate Degree in Finance with a minor in Economics from
the University of Massachusetts School Of Management and carried out additional
studies at Stanford University and the American University of Paris.
13
As a consequence of the Board's acceptance of the within Appointment, the Board
is now comprised of each of Messrs. Marcus M. Johnson, Alan Sedgwick, Steve
Jewett, D. Bruce Horton and Ms. Kivel.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
2.01 Amendment to Articles of Incorporation dated January 12, 2007 as filed
with the Secretary of State of the State of Nevada. (1)
10.01 Property Option Agreement as fully executed on November 16, 2006
between Revelstoke Industries, Inc. and Petaquilla Minerals Ltd.(2)
10.02 Letter of Intent between Geneva Gold Corp. and St. Elias Mines Ltd.
dated January 22, 2007. (3)
10.03 Vilcoro Property Option Agreement dated January 22, 2007 between St.
Elias Mines Ltd. and Geneva Gold Corp. (4)
31.1 Certification of Chief Executive Officer pursuant to Securities
Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities
Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-
14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(1) Incorporated by reference to Exhibit 2.01 of Geneva Gold Corp. Quarterly
Report on Form 10-QSB filed with the Securities and Exchange Commission on
January 16, 2007.
(2) Incorporated by reference to Exhibit 10.01 of Revelstoke Industries, Inc.
Current Report on Form 8-K filed with the Securities and Exchange Commission
on November 16, 2006.
(3) Incorporated by reference to Exhibit 10.01 of Geneva Gold Corp. Current
Report on Form 8-K filed with the Securities and Exchange Commission on
January 26, 2007.
(4) Incorporated by reference to Exhibit 10.01 of Geneva Gold Corp. Current
Report on Form 8-K filed with the Securities and Exchange Commission on
February 28, 2007.
14
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.
GENEVA Resources,Inc.
Dated: April 18, 2007 By: /s/ MARCUS JOHNSON
_______________________________
Marcus Johnson, Chief Executive
Officer/President
Dated: April 18, 2007 By: /s/ D. BRUCE HORTON
________________________________
D. Bruce Horton, Chief Financial
Officer/Treasurer
15