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 February 28, 2005
--------------------
[ ] 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: 15,601,648 shares of $0.001 par value
common stock outstanding as of April 14, 2005.
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
February 28, 2005
(Stated in US Dollars)
(Unaudited)
-----------
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
February 28, 2005 and November 30, 2004
(Stated in US Dollars)
(Unaudited)
-----------
February 28, November 30,
ASSETS 2005 2004
------ ---- ----
Current
Cash $ 85,046 $ 51,103
Prepaid expenses 9,567 3,863
----------------- -----------------
94,613 54,966
Capital assets - Note 3 1,641 1,774
----------------- -----------------
$ 96,254 $ 56,740
================= =================
LIABILITIES
------------
Current
Accounts payable and accrued liabilities $ 42,888 $ 43,004
Due to related parties - Note 6 59,438 58,516
----------------- -----------------
102,326 101,520
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SHAREHOLDERS' DEFICIENCY
------------------------
Common stock, $0.001 par value - Notes 4, 5 and 8
200,000,000 shares authorized
15,601,648 shares issued (November 30, 2004 - 10,284,848) 15,602 10,285
Additional paid-in capital 1,901,139 498,056
Stock subscriptions receivable (100) (100)
Deficit accumulated during the pre-exploration stage (1,922,713) (553,021)
----------------- -----------------
(6,072) (44,780)
----------------- -----------------
$ 96,254 $ 56,740
================= =================
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three months ended February 28, 2005 and February 29, 2004
and for the period December 9, 1999 (Date of Incorporation) to February 28, 2005
(Stated in US Dollars)
(Unaudited)
-----------
December 9, 1999
(Date of
Three months ended Incorporation) to
February 28, February 29, February 28,
2005 2004 2005
---- ---- ----
Expenses
General and administrative - Note 6 $ 91,097 $ 57,696 $ 596,339
Mineral property costs 1,278,595 16,655 1,326,374
----------------- ----------------- --------------------
Net loss for the period $ (1,369,692) $ (74,351) $ (1,922,713)
================= ================= ====================
Basic and diluted loss per share $ (0.13) $ (0.01)
================ ================
Weighted average number of shares outstanding 10,426,421 9,719,430
================= =================
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three months ended February 28, 2005 and February 29, 2004
and for the period December 9, 1999 (Date of Incorporation) to February 28, 2005
(Stated in US Dollars)
(Unaudited)
-----------
December 9,
1999
(Date of
Incorporation)
Three months ended to
February 28, February 29, February 28,
2005 2004 2005
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ (1,369,692) $ (74,351) $ (1,922,713)
Add items not affecting cash:
Amortization 133 - 172
Capital contributions - - 29,250
Mineral property costs 1,250,000 - 1,250,000
Changes in non-cash working capital balances
related to operations
Prepaid expenses (5,704) 689 (9,567)
Accounts payable and accrued liabilities (116) 3,000 42,888
Due to related parties 922 2,862 59,438
----------------- ----------------- -----------------
(124,457) (67,800) (550,532)
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Cash Flows from Investing Activity
Acquisition of capital assets - - (1,813)
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Cash Flows from Financing Activity
Capital stock issued 158,400 64,074 637,391
----------------- ----------------- -----------------
Increase (decrease) in cash during the period 33,943 (3,726) 85,046
Cash, beginning of the period 51,103 37,429 -
----------------- ----------------- -----------------
Cash, end of the period $ 85,046 $ 33,703 $ 85,046
================= ================= =================
Supplemental disclosure of cash flow
information
Cash paid for:
Interest $ - $ - $ -
================= ================= =================
Income taxes $ - $ - $ -
================= ================= =================
Non-cash transaction - Note 7
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period December 9, 1999
(Date of Incorporation) to February 28, 2005
(Stated in US Dollars)
(Unaudited)
-----------
Deficit
Accumulated
Additional Stock During the
Common Shares Paid-in Subscriptions Pre-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)
Capital stock issued for cash - at $0.50 316,800 317 158,083 - - 158,400
Capital stock issued for resource
property - at $0.25 5,000,000 5,000 1,245,000 - - 1,250,000
Net loss for the period - - - - (1,369,692) (1,369,692)
---------- ----------- ------------ ------------ ----------------- ---------------
Balance, as at February 28, 2005 15,601,648 $ 15,602 $ 1,901,139 $ (100) $ (1,922,713) $ (6,072)
========== =========== ============ =============== ================= =============
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
February 28, 2005
(Stated in US Dollars)
(Unaudited)
-----------
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim three
month financial statement is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and
cash flows for the interim periods presented in accordance with
accounting principles generally accepted in the United States of
America. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and
financial position have been included and all adjustments are of a
normal recurring nature. It is suggested that these financial
statements be read in conjunction with the company's November 30,
2004 annual financial statements.
Operating results for the quarter ended February 28, 2005 are not
necessarily indicative of the results that can be expected for the
year ending November 30, 2005.
Note 2 Continuance of Operations
-------------------------
The financial statements have been prepared using generally
accepted accounting principles in the United States of America
applicable for a going concern which assumes that the Company will
realize its assets and discharge its liabilities in the ordinary
course of business. At February 28, 2005, the Company had a
working capital deficiency of $7,713, which is not sufficient to
meet its planned business objectives or to fund mineral property
expenditures and ongoing operations for the next twelve months.
The Company has yet to achieve profitable operations and has
accumulated losses of $677,713 since its commencement. Its ability
to continue as a going concern is dependent upon the ability of
the Company to obtain the necessary financing to meet its
obligations and pay its liabilities arising from normal business
operations when they come due.
Note 3 Capital Assets
--------------
2005 2004
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Accumulated
Cost Amortization Net Net
---- ------------ --- ---
Computer equipment $ 1,813 $ 172 $ 1,641 $ 1,774
============ =============== =============== ==============
Note 4 Mineral Properties
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a) Abitibi West County, Quebec, Canada
-----------------------------------
The Company acquired five mineral claims located in the Chazel
Township, in the Province of Quebec. The claims are in good
standing until November 14, 2006.
Brookmount Explorations Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
February 28, 2005
(Stated in US Dollars)
(Unaudited) - Page 2
-----------
Note 4 Mineral Properties - (cont'd)
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b) Mercedes Property, Junin, Peru
Pursuant to a property acquisition agreement dated for
reference 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 (issued). The vendor has directed the Company to issue
2,100,000 of these common shares to two other directors of the
Company.
Note 5 Capital Stock - Notes 4 and 8
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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 February 28, 2005, the Company had sold
1,142,748 common shares for proceeds of $571,786. This amount has
been included in share capital at February 28, 2005.
Note 6 Related Party Transactions - Note 4
--------------------------
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
Three months ended Incorporation) to
February 28, February 29, February 28,
2005 2004 2005
---- ---- ----
General and administrative:
Consulting fees $ - $ - $ 3,000
Management fees 52,500 44,000 328,500
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$ 52,500 $ 44,000 $ 331,500
=============== ============= =================
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.
Brookmount Explorations Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
February 28, 2005
(Stated in US Dollars)
(Unaudited) - Page 3
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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 three months ended February 28, 2005, the
Company issued 5,000,000 common shares at $0.25 pursuant to the
resource property acquisition agreement (Note 4b). This
transaction was excluded from the statement of cash flows for the
three months ended February 28, 2005 and for the period December
9, 1999 (Date of Incorporation) to February 28, 2005.
Note 8 Subsequent Event
----------------
Subsequent to August 31, 2004, the Company received proceeds of
$35,000 for share subscriptions pursuant to the offering
memorandum (Note 5).
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 the sole director of the
Company, who also acts as the Company's President, the Chief Executive Officer,
and the Chief Financial Officer.
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. We plan to start our 2005 exploration programs in June.
We anticipate that these programs will cost $10,000 and $449,100 respectively.
In addition, we anticipate spending $18,000 on professional fees, $198,000 on
management fees, $42,000 on travel costs, $18,000 on promotional expenses and
$36,000 on other administrative expenses.
Total expenditures over the next 12 months are therefore expected to be
$771,100. 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 Three-Month Period Ended February 28, 2005
--------------------------------------------------------------------
We did not earn any revenues during the period ending February 28, 2005. We do
not anticipate earning revenues until such time as we have entered into
commercial production of the Brookmount claims or the Mercedes property. We are
presently in the pre-exploration stage of our business and we can provide no
assurance that we will discover economic mineralization levels of minerals on
either property, or if such minerals are discovered, that we will enter into
commercial production.
We incurred operating expenses in the amount of $1,369,692 for the three-month
period ended February 28, 2005. During the quarter we issued 5,000,000 shares
at $0.25 per share for Mercedes Property pursuant to a property acquisition
agreement dated for reference July 3, 2005 and amended on January 24, 2005.
Operating expenses included consulting fees of $12,960 and management fees of
$40,500.
Our net loss increased from $74,351 in fiscal 2004 to $1,369,692 in fiscal 2005
primarily due to $ 1,250,000 mineral property costs recorded by the company upon
issuance of 5,000,000 shares of the company's capital stock and a general
increase in company's activity surrounding our change of management and the
identification, negotiation and execution of an agreement to acquire an interest
in the Mercedes property.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
stated in their report that they have substantial doubt that we will be able to
continue as a going concern.
At February 28, 2005, we had assets of $96,254 consisting of cash on hand of
$85,046 (2004: $33,703), resource property cost advances of $Nil (2004:
$15,130), prepaid expenses of $9,567 (2004: $Nil), and capital assets of $1,641
(2004: $Nil). At the same date, we had $102,326 (2004: $69,503) in liabilities
consisting of accounts payable and accrued liabilities of $42,888 (2004:
$15,575) and $59,438 (2004: $53,928) 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 three-month period ended February 28, 2005, the Company accepted
subscriptions for a total of 316,800 shares of common stock for $0.50 each
pursuant to a private placement offering.
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 three-month period ended February 28, 2005, the Company did not file
any current reports on Form 8-K.
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: April 19, 2005
Brookmount Explorations Inc.
/s/ Zaf Sungur
---------------------------
Zaf Sungur
C.O.O., Secretary, treasurer
and principal accounting
officer
Dated: April 19, 2005