10-Q
2011-10-31
false
Siga Resources Inc.
0001386936
--07-31
45025000
Smaller Reporting Company
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<!--egx--><pre>1. ORGANIZATION</pre><pre> </pre><pre>The Company, Siga Resources Inc., was incorporated under the laws of the State</pre><pre>of Nevada on January 18, 2007 with the authorized capital stock of 300,000,000</pre><pre>shares at $0.001 par value. On January 31, 2008, the Secretary of State for</pre><pre>Nevada approved an amendment to the Articles of Incorporation where the total</pre><pre>number of shares of common stock was increased to 500,000,000 shares of common</pre><pre>stock with a par value of $0.001 per share.</pre><pre> </pre><pre>The Company was organized for the purpose of acquiring and developing mineral</pre><pre>properties. At the report date mineral claims, with unknown reserves, had been</pre><pre>acquired. The Company has not established the existence of a commercially</pre><pre>minable ore deposit and is in the exploration stage.</pre>
<!--egx--><pre>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</pre><pre> </pre><pre>ACCOUNTING METHODS</pre><pre> </pre><pre>The Company recognizes income and expenses based on the accrual method of</pre><pre>accounting.</pre><pre> </pre><pre>DIVIDEND POLICY</pre><pre> </pre><pre>The Company has not yet adopted a policy regarding payment of dividends.</pre><pre> </pre><pre>BASIC AND DILUTED NET INCOME (LOSS) PER SHARE</pre><pre> </pre><pre>Basic net income (loss) per share amounts are computed based on the weighted</pre><pre>average number of shares actually outstanding. Diluted net income (loss) per</pre><pre>share amounts are computed using the weighted average number of common and</pre><pre>common equivalent shares outstanding as if shares had been issued on the</pre><pre>exercise of the common share rights unless the exercise becomes anti-dilutive</pre><pre>and then the basic and diluted per share amounts are the same.</pre><pre> </pre><pre>EVALUATION OF LONG-LIVED ASSETS</pre><pre> </pre><pre>The Company periodically reviews its long term assets and makes adjustments, if</pre><pre>the carrying value exceeds fair value.</pre><pre> </pre><pre>INCOME TAXES</pre><pre> </pre><pre>The Company utilizes the liability method of accounting for income taxes. Under</pre><pre>the liability method deferred tax assets and liabilities are determined based on</pre><pre>differences between financial reporting and the tax bases of the assets and</pre><pre>liabilities and are measured using the enacted tax rates and laws that will be</pre><pre>in effect, when the differences are expected to be reversed. An allowance</pre><pre>against deferred tax assets is recorded, when it is more likely than not, that</pre><pre>such tax benefits will not be realized.</pre><pre> </pre><pre>INCOME TAXES - CONTINUED</pre><pre> </pre><pre>On October 31, 2010 the Company had a net operating loss carry forward of</pre><pre>$414,261 for income tax purposes. The tax benefit of approximately $141,000 from</pre><pre>the loss carry forward has been fully offset by a valuation reserve because the</pre><pre>future tax benefit is undeterminable since the Company is unable to establish a</pre><pre>predictable projection of operating profits for future years. Losses will begin</pre><pre>to expire in 2027.</pre><pre> </pre><pre>FOREIGN CURRENCY TRANSLATIONS</pre><pre> </pre><pre>Part of the transactions of the Company were completed in Canadian dollars and</pre><pre>have been translated to US dollars as incurred, at the exchange rate in effect</pre><pre>at the time, and therefore, no gain or loss from the translation is recognized.</pre><pre>The functional currency is considered to be US dollars.</pre><pre> </pre><pre>REVENUE RECOGNITION</pre><pre> </pre><pre>Revenue is recognized on the sale and delivery of a product or the completion of</pre><pre>a service provided.</pre><pre> </pre><pre>ADVERTISING AND MARKET DEVELOPMENT</pre><pre> </pre><pre>The company expenses advertising and market development costs as incurred.</pre><pre> </pre><pre>FINANCIAL INSTRUMENTS</pre><pre> </pre><pre>The carrying amounts of financial instruments are considered by management to be</pre><pre>their fair value due to their short term maturities.</pre><pre> </pre><pre>ESTIMATES AND ASSUMPTIONS</pre><pre> </pre><pre>Management uses estimates and assumptions in preparing financial statements in</pre><pre>accordance with general accepted accounting principles. Those estimates and</pre><pre>assumptions affect the reported amounts of the assets and liabilities, the</pre><pre>disclosure of contingent assets and liabilities, and the reported revenues and</pre><pre>expenses. Actual results could vary from the estimates that were assumed in</pre><pre>preparing these financial statements.</pre><pre> </pre><pre>IMPAIRMENT OF LONG-LIVED ASSETS</pre><pre> </pre><pre>The Company reviews and evaluates long-lived assets for impairment when events</pre><pre>or changes in circumstances indicate that the related carrying amounts may not</pre><pre>be recoverable. The assets are subject to impairment consideration under ASC</pre><pre>360-10-35-17 if events or circumstances indicate that their carrying amounts</pre><pre>might not be recoverable. When the Company determines that an impairment</pre><pre>analysis should be done, the analysis will be performed using rules of ASC</pre><pre>930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or</pre><pre>Disposal of Long-Lived Assets.</pre><pre> </pre><pre>MINERAL PROPERTY ACQUISITION COSTS</pre><pre> </pre><pre>Mineral property acquisition costs are initially capitalized when incurred.</pre><pre>These costs are then assessed for impairment when factors are present to</pre><pre>indicate the carrying costs may not be recoverable. Mineral exploration costs</pre><pre>are expensed when incurred.</pre><pre> </pre><pre>STATEMENT OF CASH FLOWS</pre><pre> </pre><pre>For the purposes of the statement of cash flows, the Company considers all</pre><pre>highly liquid investments with a maturity of three months or less to be cash</pre><pre>equivalents.</pre><pre> </pre><pre>ENVIRONMENTAL REQUIREMENTS</pre><pre> </pre><pre>At the report date environmental requirements related to the mineral claim</pre><pre>acquired are unknown and therefore any estimate of any future cost cannot be</pre><pre>made.</pre><pre> </pre><pre>RECLASSIFICATIONS</pre><pre> </pre><pre>Certain prior period amounts have been reclassified to conform with current</pre><pre>period presentation.</pre><pre> </pre><pre>RECENT ACCOUNTING PRONOUNCEMENTS</pre><pre> </pre><pre>The Company does not expect that the adoption of recent accounting</pre><pre>pronouncements will have a material impact on its financial statements.</pre><pre> </pre>
<!--egx--><pre>3. ACQUISITION OF MINERAL CLAIM</pre><pre> </pre><pre>On March 11, 2007, the Company acquired the Valolo Gold Claim located in the</pre><pre>Republic of Fiji for the consideration of $5,000 including a geological report.</pre><pre>The Valolo Gold Claim is located 10 miles east of the town of Korovou , Fiji.</pre><pre>Under Fijian law, the claim remains in good standing as long as the Company has</pre><pre>an interest in it. There is no annual maintenance fee or minimum exploration</pre><pre>work required on the Claim. The acquisition costs have been impaired and</pre><pre>expensed because there has been no exploration activity nor has there been any</pre><pre>reserve established and we cannot currently project any future cash flows or</pre><pre>salvage value for the coming year and the acquisition costs might not be</pre><pre>recoverable.</pre>
<!--egx--><pre>4. INVESTMENT IN JOINT VENTURE</pre><pre> </pre><pre>On January 16, 2011, the Company entered into a Property and Royalty Agreement</pre><pre>with Peter Osha whereby the Company would have acquired Peter Osha's Lucky</pre><pre>Thirteen Placer Mining Property near Hope, British Columbia, Canada in exchange</pre><pre>for $1.5 million Canadian plus a 3% net smelter royalty. Payments on the</pre><pre>property are due as follows:</pre><pre> </pre><pre> By or before January 15, 2011 * $ 10,000</pre><pre> By or before April 15, 2011 * 40,000</pre><pre> By or before July 15, 2011 ** 50,000</pre><pre> By or before January 15, 2012 100,000</pre><pre> By or before July 15, 2012 100,000</pre><pre> By or before January 15, 2013 150,000</pre><pre> By or before July 15, 2013 150,000</pre><pre> By or before January 15, 2014 200,000</pre><pre> By or before July 15, 2014 200,000</pre><pre> By or before January 15, 2015 250,000</pre><pre> By or before July 15, 2015 250,000</pre><pre> ----------</pre><pre> Total $1,500,000</pre><pre> ==========</pre><pre>----------</pre><pre>* Paid by the Company</pre><pre>** Paid by Lucky 13 Mining Company Ltd.</pre><pre> </pre><pre>This agreement replaces the previously disclosed agreement dated September 16,</pre><pre>2010 between the company and Touchstone Precious Metals Inc.</pre><pre> </pre><pre>On May 12, 2011, the Company entered into a joint venture agreement with Big</pre><pre>Rock Resources Inc. whereby, the Company transferred its interest (and related</pre><pre>payments due) in the Lucky Thirteen Mining Property to Lucky 13 Mining Company</pre><pre>Ltd. This transfer provided the Company with a 50% ownership interest in Lucky</pre><pre>13 Mining Company Ltd. Per the joint venture agreement, Big Rock Resources Inc.</pre><pre>has agreed to fund Lucky 13 Mining Company Ltd. to provide financing for</pre><pre>exploration and for its mineral lease payments. Payments due from Big Rock</pre><pre>Resources Inc. to Lucky 13 Mining Company Ltd. are as follows:</pre><pre> </pre><pre> 1. Payment of $400,000 for the initial work program and property payments</pre><pre> on the Project, payable as follows:</pre><pre> a. $50,000 by May 14, 2011, which has been received;</pre><pre> b. $350,000 by May 31, 2011 which has been received;</pre><pre> </pre><pre> 2. Payment of $8,500,000 for the cost of putting the Project into</pre><pre> production. Lucky 13 Mining Company Ltd. is 50% owned by both Big Rock</pre><pre> Resources Ltd. and the Company.</pre><pre> </pre><pre>As indicated above, the Company transferred its interests in the Mining Claims</pre><pre>to the Joint Venture with a cost basis of $51,734. The Company accounts for this</pre><pre>Joint Venture using the equity method. For the time period May 12, 2011 to</pre><pre>October 31, 2011, the joint venture reported a net loss of approximately</pre><pre>$186,000. Accordingly, the Company recorded its share of those losses, but only</pre><pre>up to the cost of its investment.</pre><pre> </pre>
<!--egx--><pre>5. RELATED PARTY TRANSACTIONS</pre><pre> </pre><pre>On November 15, 2010, 200,000 shares of common stock were issued to the</pre><pre>directors under the terms and conditions of their consulting agreements.</pre><pre> </pre><pre>Officers-directors are accruing management fees payable of $1,500 per month to</pre><pre>each director. As of October 31, 2011 $5,500 is due to the Company's</pre><pre>officers-directors.</pre>
<!--egx--><pre>6. CAPITAL STOCK</pre><pre> </pre><pre>On July 11, 2007, the Company completed a private placement consisting of</pre><pre>26,250,000 post split common shares sold to directors and officers for a total</pre><pre>consideration of $750. On July 31, 2007, the Company completed a private</pre><pre>placement of 17,535,000 post split common shares for a total consideration of</pre><pre>$25,050. On January 16, 2008, the directors of the Company approved a resolution</pre><pre>to forward split the common shares of the Company based on a 35 new shares for</pre><pre>each old share held by the shareholders ("Forward Split"). As a result of the</pre><pre>Forward Split the common shares increased from 1,251,000 common shares with a</pre><pre>par value of $0.001 per share to 43,785,000 common shares with a par value of</pre><pre>$0.001 per share. All share references in these financial statements have been</pre><pre>retroactively adjusted for this Forward Split.</pre><pre> </pre><pre>As noted above in Footnote 5, the Company issued 200,000 shares to the directors</pre><pre>as per their consulting agreements. These shares were valued at $90,000, which</pre><pre>was the quoted price of the Company's stock on the agreement date of September</pre><pre>9, 2010. These shares were issued on November 15, 2010.</pre><pre> </pre><pre>On July 28, 2011, the Company completed a private placement consisting of</pre><pre>1,000,000 shares for a total consideration of $60,000 and 40,000 shares for a</pre><pre>total consideration of $10,000. The Company has also received $20,000 for a</pre><pre>share subscription, for which the Company will issue 80,000 shares.</pre><pre> </pre>
<!--egx--><pre>7. GOING CONCERN</pre><pre> </pre><pre>The Company will need additional working capital to service its debt and to</pre><pre>develop the mineral claims acquired, which raises substantial doubt about its</pre><pre>ability to continue as a going concern. Continuation of the Company as a going</pre><pre>concern is dependent upon obtaining additional working capital and the</pre><pre>management of the Company has developed a strategy, which it believes will</pre><pre>accomplish this objective through additional equity funding, and long term</pre>
0001386936
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2011-10-31
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2011-07-31
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2010-10-31
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