10-Q
2012-08-31
false
Portage Resources Inc.
0001403674
--05-31
456759900
Smaller Reporting Company
Yes
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<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>1 - ORGANIZATION AND BASIS OF PRESENTATION</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Portage Resources Inc. (the “Company”) was incorporated under the laws of the State of Nevada on July 20, 2006 with authorized common stock of 5,000,000,000 shares at $0.001 par value.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company was organized for the purpose of acquiring and developing mineral properties.  The Company has not reached the exploration stage and is considered to be in the pre-exploration stage.  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On June 22, 2011, the Company incorporated two subsidiaries to undertake mineral acquisition and exploration activities in Peru known as Portage Resources Peru S.A. and Portage Minerals Peru Sociedad Anonima.  Under Peruvian regulation each Company must have one Peruvian shareholder to be validly incorporated; therefore, the Company has incorporated each entity with 99 shares held by the Company and 1 share held by a Peruvian resident.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin:0in;margin-bottom:.0001pt'>The unaudited interim condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2012, which was filed with the United States Securities and Exchange Commission on September 19, 2012. The results of operations for the three months ended August 31, 2012 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending May 31, 2013.</p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt'>These interim financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.  If the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.  These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.</p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Dividend Policy</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company has not yet adopted a policy regarding payment of dividends.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Basic and Diluted Net Income (loss) Per Share</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Basic net incomes (loss) per share amounts are computed based on the weighted average number of shares actually outstanding.  Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then the basic and diluted per share amounts are the same.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Income Taxes</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Income taxes are determined using assets and liability 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 bases.  Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.  In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not.  The Company has adopted FASB ASC 740 as of its inception.  Pursuant to FASB ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward.  Potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future periods; and accordingly is offset by a valuation allowance.  FIN No. 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken in tax returns.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts would be accrued and classified as a component of income tax in our Consolidated Statements of Operations and Comprehensive Loss.  The Company elected this accounting policy, which is a continuation of our historical policy, in connection with our adoption FIN 48.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the availability of NOL carry forwards to offset taxable income when an ownership change occurs.  Due to the May 30, 2011 sale of stock from Messrs. Caron and James to Mr. Belfiore, some of the NOL’s may be limited.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Foreign Currency Translations</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The functional currency of the Company and its subsidiaries is the US Dollar. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non- monetary assets and liabilities denominated in a foreign currency are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Exchange gains or losses arising on translation of foreign currency items are included in the statement of operations.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Revenue Recognition</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Revenue is recognized on the sale and delivery of a product or the completion of a service provided.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Advertising and Market Development</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The company expenses advertising and market development costs as incurred.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Financial Instruments</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Fair Value Measurements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is estimated by applying the following hierarchy, which prioritize the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The three levels of the fair value hierarchy under ASC 820 are described below:  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 2 - Inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 3 - Inputs that are both significant to the fair value measurement and unobservable.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company’s cash and cash equivalents and short-term investments are classified within Level 1of the fair value hierarchy because they are valued using quoted market prices.  The carrying amounts of accounts payable, advances payable and short-term loans approximate their fair value due to short term maturities.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Impairment of Long-lived Assets</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.  The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable.  When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Mineral Property Acquisition Costs</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Mineral property acquisition costs are initially capitalized when incurred.  These costs are then assessed for impairment when factors are present to indicate the carrying costs may not be recoverable.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Although the Company has taken steps to verify title to mineral properties in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title.  Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Exploration Costs</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Exploration costs, which include maintenance, development and exploration of mineral claims, are expensed as incurred.  When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives.  To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Comprehensive Income</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>FASB ASC220 “</font><font style='line-height:115%'> <i><font style='background:white'>Reporting Comprehensive Income”</font> </i><font style='background:white'>establishes standards for the reporting and display of comprehensive income and its components in the financial statements.</font></font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Estimates and Assumptions</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were assumed in preparing these financial statements.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Statement of Cash Flows</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Environmental Requirements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>At the report date environmental requirements related to the mineral claim acquired are unknown and therefore any estimate of any future cost cannot be made.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Principles of Consolidation</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>These financial statements include the accounts of the Company and its two subsidiaries (Portage Resources Peru S.A. and Portage Minerals Peru Sociedad Anomina) on a consolidated basis.  All inter-company accounts have been eliminated.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Recently Adopted Accounting Pronouncements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>i)  ASU 2011-06</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In January 2010, the FASB issued guidance regarding fair value: 1) adding new requirements for disclosures about transfers into and out of Levels 1 and 2 measurements and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements, and 2) clarifying existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>The guidance also required that disclosures about postretirement benefit plan assets be provided by classes of assets instead of by major categories of assets.  The guidance is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide Level 3 activity, which was effective for fiscal years beginning after December 15, 2010.  The Company has adopted this guidance, which did not have any effect on its results of operations, financial position and cash flows.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>ii)  ASU 2011-04</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.”  The new guidance does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within GAAP or International Financial Reporting Standards (“IFRSs”).  The new guidance also changes the working used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements and it clarifies the FASB’s intent about the application of existing fair value measurements.  The new guidance applies prospectively and is effective for interim and annual periods beginning after December 15, 2011.  Adoption of the new provisions did not have a material impact on our financial condition or results of operations.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>iii)  ASU 2011-05</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (ASU 2011-05).  The objective of this amendment is to increase the prominence of other comprehensive income in the financial statements.  The amendments require entities to report components of net income and the components of other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements.  Additionally, the amendments in ASU 2011-05 require an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented.  In December 2011, the FASB issued Accounting Standards Update No. 2011-12, which deferred the specific requirements related to the presentation of reclassification adjustments.  This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.   Adoption of this ASU only affected financial statement presentation.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>iv)  ASU 2011-08</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In September 2011, FASB issued Accounting Standards Update No. 2011-08, Testing Goodwill for Impairment (ASU 2011-08), which amends the guidance in ASC 350-20.  The amendments in ASU 2011-08 provide entities with the option of performing a qualitative assessment before performing the first step of the two-step impairment test.  If entities determine, on the basis of qualitative factors, it is not more likely than not that the fair value of the reporting unit is less than the carrying amount, then performing the two-step impairment test would be unnecessary.  However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.  If the carrying amount of a reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any.  ASU 2011-08 also provides entities with the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the first step of the two-step impairment test.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>ASU 2011-08 is effective for interim and annual periods beginning after December 15, 2011 but early adoption is permitted.  Adoption of the new provisions did not have a material impact on our financial condition or results of operations.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>3 - ADVANCES PAYABLE</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>During the fiscal year ended May 31, 2011, a director of the Company made advances of $12,381 to the Company for operations, and paid expenses on behalf of the Company of $3,900 ($5,200 in 2009). These advances are non-interest bearing and payable on demand. On May 30, 2011 the Director resigned from the Board of Directors of the Company, and as at May 31, 2011 the entire amount advanced by this former Director, totaling </font><font style='line-height:115%;background:white'>$108,364</font><font style='line-height:115%;background:white'>, was reclassified as advances payable.  On June 22 2011, the former director made an additional advance of $40 to the Company. As at August 31, 2012, the balance due to this former director totaled </font><font style='line-height:115%;background:white'>$108,404</font><font style='line-height:115%;background:white'>. This amount is unsecured, bears no interest and has no specific terms of repayment.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>4 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>During fiscal 2012, Portage Resource Inc. has paid </font><font style='line-height:115%;background:white'>$6,740</font><font style='line-height:115%;background:white'> to Mr. Paul Luna Belfiore, a director and officer of the Company for consulting services. There were no significant transactions with related parties for the three months ended August 31, 2012. </font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>5 - COMMON STOCK</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><i><font style='line-height:115%;background:white'>COMMON STOCK TO BE ISSUED</font></i></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On July 27, 2011, the Board of Directors unanimously approved a dividend whereby the shareholders of the Company will receive a dividend payable as a ten for one (10:1) forward split of the issued and outstanding shares of Common Stock of the Company pursuant to Section 78.215 of the Nevada Revised Statutes.  Further, as part of this approved action of the Board of Directors, the Company’s Executive Officer, and Mr. Paul Luna Belfiore agreed to return a total of </font><font style='line-height:115%;background:white'>230,000,000</font><font style='line-height:115%;background:white'> restricted shares to treasury for cancellation prior to the Effective Date.  As at October 31, 2011 the Company had not yet received FINRA approval for the above-noted transaction and withdrew the dividend.  Concurrent with this action, the Board of directors agreed to re-issue 230,000,000 restricted shares to Mr. Belfiore.  As at the date of this report, the 230,000,000 shares remain unissued.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On August 10th, 2011, the Company entered into a share purchase agreement with Nilam Resources S.A. Peru (“Nilam”), whereby subscribed for a total of </font><font style='line-height:115%;background:white'>195,400</font><font style='line-height:115%;background:white'> shares of common stock of the Company at </font><font style='line-height:115%;background:white'>$0.10</font><font style='line-height:115%;background:white'> per common share for proceeds of </font><font style='line-height:115%;background:white'>$19,540</font><font style='line-height:115%;background:white'>.  The funds have been received from Nilam; however the shares have not yet been issued.  During the year ended May 31, 2012 the Company received further advances from Nilam totaling </font><font style='line-height:115%;background:white'>$9,450</font><font style='line-height:115%;background:white'> under another share purchase agreement for a total of </font><font style='line-height:115%;background:white'>315,000</font><font style='line-height:115%;background:white'> shares of common stock at a price of </font><font style='line-height:115%;background:white'>$0.03</font><font style='line-height:115%;background:white'> per share.  All these shares were issued on June 14, 2012.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On September 26th 2011, Portage Minerals Peru S.A. (entered into a sales and purchase agreement with Nilam Resources Inc. (Nilam) to acquire 55% of the mining concession called Rocas#1.  Under the terms of the Agreement, Nilam is to receive </font><font style='line-height:115%;background:white'>7,000,000</font><font style='line-height:115%;background:white'> shares of the common stock of Portage Resources Inc.  These shares were valued at </font><font style='line-height:115%;background:white'>$0.20</font><font style='line-height:115%;background:white'> based on the closing price of the Company’s common stock on September 26, 2011 (Note 3). All these shares were issued on June 14, 2012.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On September 30th 2011, Portage Minerals Peru S.A. entered into a sales and purchase agreement with Nilam Resources Inc. (Nilam) to acquire 55% of the mining concession called Rocas#2.  Under the terms of the Agreement, Nilam is to receive </font><font style='line-height:115%;background:white'>3,500,000</font><font style='line-height:115%;background:white'> shares of the common stock of Portage Resources Inc.  These shares were valued at </font><font style='line-height:115%;background:white'>$0.30</font><font style='line-height:115%;background:white'> based on the closing price of the Company’s common stock on September 26, 2011 (Note 3).  All these shares were issued on June 14, 2012.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>7 - SHORT-TERM LOANS</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On November 30, 2011, the Company requested a loan from Nilam Resources Inc. of </font><font style='line-height:115%;background:white'>$5,520</font><font style='line-height:115%;background:white'> due on demand.  The loan bears no interest for six months whereby non-payment after six months should incur a $100 per month non-compounded interest charge. The loan became on-demand on May 31, 2012. During the three months ended August 31, 2012, interest accrual of </font><font style='line-height:115%;background:white'>$300</font><font style='line-height:115%;background:white'> was added to the original loan payable.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>On January 4, 2012, the Company requested a loan from BTL Media Corp. of </font><font style='line-height:115%;background:white'>$20,000</font><font style='line-height:115%;background:white'> on demand.  The loan bears no interest for six months whereby non-payment after six months should incur a $100 per month non-compounded interest charge. The loan became on-demand on July 3, 2012. During the three months ended August 31, 2012, interest accrual of </font><font style='line-height:115%;background:white'>$190</font><font style='line-height:115%;background:white'> was added to the original loan payable.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><b><font style='line-height:115%;background:white'>8 - SUBSEQUENT EVENTS</font></b></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>There were no subsequent events as at the report date.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Dividend Policy</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company has not yet adopted a policy regarding payment of dividends.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Basic and Diluted Net Income (loss) Per Share</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Basic net incomes (loss) per share amounts are computed based on the weighted average number of shares actually outstanding.  Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then the basic and diluted per share amounts are the same.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Income Taxes</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Income taxes are determined using assets and liability 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 bases.  Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.  In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not.  The Company has adopted FASB ASC 740 as of its inception.  Pursuant to FASB ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward.  Potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future periods; and accordingly is offset by a valuation allowance.  FIN No. 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken in tax returns.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts would be accrued and classified as a component of income tax in our Consolidated Statements of Operations and Comprehensive Loss.  The Company elected this accounting policy, which is a continuation of our historical policy, in connection with our adoption FIN 48.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the availability of NOL carry forwards to offset taxable income when an ownership change occurs.  Due to the May 30, 2011 sale of stock from Messrs. Caron and James to Mr. Belfiore, some of the NOL’s may be limited.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Foreign Currency Translations</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The functional currency of the Company and its subsidiaries is the US Dollar. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non- monetary assets and liabilities denominated in a foreign currency are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Exchange gains or losses arising on translation of foreign currency items are included in the statement of operations.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Revenue Recognition</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Revenue is recognized on the sale and delivery of a product or the completion of a service provided.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Advertising and Market Development</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The company expenses advertising and market development costs as incurred.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Financial Instruments</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Fair Value Measurements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is estimated by applying the following hierarchy, which prioritize the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The three levels of the fair value hierarchy under ASC 820 are described below:  </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 2 - Inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Level 3 - Inputs that are both significant to the fair value measurement and unobservable.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company’s cash and cash equivalents and short-term investments are classified within Level 1of the fair value hierarchy because they are valued using quoted market prices.  The carrying amounts of accounts payable, advances payable and short-term loans approximate their fair value due to short term maturities.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Impairment of Long-lived Assets</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.  The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable.  When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Mineral Property Acquisition Costs</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Mineral property acquisition costs are initially capitalized when incurred.  These costs are then assessed for impairment when factors are present to indicate the carrying costs may not be recoverable.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Although the Company has taken steps to verify title to mineral properties in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title.  Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Exploration Costs</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Exploration costs, which include maintenance, development and exploration of mineral claims, are expensed as incurred.  When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives.  To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.  </font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Comprehensive Income</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>FASB ASC220 “</font><font style='line-height:115%'> <i><font style='background:white'>Reporting Comprehensive Income”</font> </i><font style='background:white'>establishes standards for the reporting and display of comprehensive income and its components in the financial statements.</font></font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Estimates and Assumptions</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were assumed in preparing these financial statements.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Statement of Cash Flows</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Environmental Requirements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>At the report date environmental requirements related to the mineral claim acquired are unknown and therefore any estimate of any future cost cannot be made.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Principles of Consolidation</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%;background:white'>These financial statements include the accounts of the Company and its two subsidiaries (Portage Resources Peru S.A. and Portage Minerals Peru Sociedad Anomina) on a consolidated basis.  All inter-company accounts have been eliminated.</font></p>
<!--egx--><p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><u><font style='line-height:115%;background:white'>Recently Adopted Accounting Pronouncements</font></u></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>i)  ASU 2011-06</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In January 2010, the FASB issued guidance regarding fair value: 1) adding new requirements for disclosures about transfers into and out of Levels 1 and 2 measurements and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements, and 2) clarifying existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>The guidance also required that disclosures about postretirement benefit plan assets be provided by classes of assets instead of by major categories of assets.  The guidance is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide Level 3 activity, which was effective for fiscal years beginning after December 15, 2010.  The Company has adopted this guidance, which did not have any effect on its results of operations, financial position and cash flows.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>ii)  ASU 2011-04</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.”  The new guidance does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within GAAP or International Financial Reporting Standards (“IFRSs”).  The new guidance also changes the working used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements and it clarifies the FASB’s intent about the application of existing fair value measurements.  The new guidance applies prospectively and is effective for interim and annual periods beginning after December 15, 2011.  Adoption of the new provisions did not have a material impact on our financial condition or results of operations.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>iii)  ASU 2011-05</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (ASU 2011-05).  The objective of this amendment is to increase the prominence of other comprehensive income in the financial statements.  The amendments require entities to report components of net income and the components of other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements.  Additionally, the amendments in ASU 2011-05 require an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented.  In December 2011, the FASB issued Accounting Standards Update No. 2011-12, which deferred the specific requirements related to the presentation of reclassification adjustments.  This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.   Adoption of this ASU only affected financial statement presentation.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-indent:.2in;background:white'><font style='line-height:115%'>iv)  ASU 2011-08</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>In September 2011, FASB issued Accounting Standards Update No. 2011-08, Testing Goodwill for Impairment (ASU 2011-08), which amends the guidance in ASC 350-20.  The amendments in ASU 2011-08 provide entities with the option of performing a qualitative assessment before performing the first step of the two-step impairment test.  If entities determine, on the basis of qualitative factors, it is not more likely than not that the fair value of the reporting unit is less than the carrying amount, then performing the two-step impairment test would be unnecessary.  However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.  If the carrying amount of a reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any.  ASU 2011-08 also provides entities with the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the first step of the two-step impairment test.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:0in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;background:white'><font style='line-height:115%'>ASU 2011-08 is effective for interim and annual periods beginning after December 15, 2011 but early adoption is permitted.  Adoption of the new provisions did not have a material impact on our financial condition or results of operations.</font></p>
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