UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x |
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 30, 2013 | ||
OR | ||
o |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 000-30368
American International Ventures, Inc.
(Name of Small Business Issuer in its charter)
Delaware |
| 22-3489463 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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15122 Tealrise Way Lithia, Florida |
| 33547 |
(Address of principal executive offices) |
| (Zip Code) |
(813) 260-2866 |
(Registrants telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the proceeding 12 months and (2) has been subject to such filing requirements for the past 90 days. (1) o Yes x No: o (2) x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting Company x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes x No
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of January 25, 2014, is 205,170,044 shares of Common Stock, $.00001 par value.
1
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Item 4. Controls and Procedures.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
2
PART I FINANCIAL INFORMATION
Item 1-. Financial Statements
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AMERICAN INTERNATIONAL VENTURES, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||
| November 30, 2013 |
| May 31, 2013 | |
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ASSETS |
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Current Assets |
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Cash | $ 29,645 |
| $ 10,442 | |
Inventory | 49,012 |
| - | |
Total current assets | 78,657 |
| 10,442 | |
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Fixed Assets |
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Fixed assets - cost | 661,917 |
| 656,467 | |
Less: Accumulated depreciation | (149,969) |
| (98,687) | |
Net fixed assets | 511,948 |
| 557,780 | |
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Other Assets |
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Mining claims | 1,321,707 |
| 1,321,707 | |
Total other assets | 1,321,707 |
| 1,321,707 | |
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TOTAL ASSETS | $ 1,912,312 |
| $ 1,889,929 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Current portion of convertible notes payable and related interest | $ 138,425 |
| $ 35,000 | |
Current portion of note payable | 11,133 |
| 11,133 | |
Accounts payable and accrued expenses | 79,685 |
| 60,281 | |
Deposit received | 60,000 |
| - | |
Total current liabilities | 289,243 |
| 106,414 | |
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Long Term Debt |
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Long term convertible note and related interest | 76,545 |
| - | |
Long term portion of notes payable | 352,800 |
| 357,993 | |
Warrant liability | 380,100 |
| 543,000 | |
Total long - term debt | 809,445 |
| 900,993 | |
Total Liabilities | 1,098,688 |
| 1,007,407 | |
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Stockholders' Equity |
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Common stock - authorized, 400,000,000 shares of $.00001 par value; issued and outstanding, 205,170,044 and 204,220,044, respectively | 2,052 |
| 2,042 | |
Additional paid in capital | 6,700,368 |
| 6,523,878 | |
Deficit accumulated during exploration stage | (5,888,796) |
| (5,643,398) | |
Total stockholders equity | 813,624 |
| 882,522 | |
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | $ 1,912,312 |
| $ 1,889,929 |
The accompanying notes are an integral part of these financial statements.
3
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AMERICAN INTERNATIONAL VENTURES, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
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| Cumulative from | |||
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| January 25, 2012 | |||
| Six Month Periods Ended November 30, |
| (Date of Formation) | |||||
| 2013 |
| 2012 |
| To November 30, 2013 | |||
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Sales | $ 129,961 |
| $ - |
| $ 129,961 | |||
Production cost | 105,481 |
| - |
| 105,481 | |||
Gross profit | 24,480 |
| - |
| 24,480 | |||
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Administrative expenses | 409,539 |
| 4,273,853 |
| 6,583,397 | |||
Operating loss | (385,059) |
| (4,273,853) |
| (6,558,917) | |||
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Other Income and Expense: |
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Revaluation of warrants | 162,900 |
| - |
| 624,450 | |||
Option payment income | - |
| - |
| 95,000 | |||
Interest income | - |
| 54 |
| 122 | |||
Interest expense | (23,239) |
| (6,496) |
| (49,451) | |||
Total other income (expense) | 139,661 |
| (6,442) |
| 670,121 | |||
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Net Loss | $ (245,398) |
| $ (4,280,295) |
| $ (5,888,796) | |||
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Net Loss Per Share Basic and Diluted | $ - |
| $ (.02) |
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Weighted Average Number of Shares Outstanding | 204,874,142 |
| 194,067,558 |
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The accompanying notes are an integral part of these financial statements.
4
AMERICAN INTERNATIONAL VENTURES, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||
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| Cumulative from |
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| January 25, 2012 |
| Three Month Periods Ended November 30, |
| (Date of Formation) | ||
| 2013 |
| 2012 |
| To November 30, 2013 |
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Sales | $ 28,550 |
| $ - |
| $ 129,961 |
Production cost | 17,822 |
| - |
| 105,481 |
Gross profit | 10,728 |
| - |
| 24,480 |
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Administrative expenses | 128,726 |
| 1,440,596 |
| 6,583,397 |
Operating loss | (117,998) |
| (1,440,596) |
| (6,558,917) |
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Other Income and Expense: |
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Revaluation of warrants | 81,450 |
| - |
| 624,450 |
Option payment income | - |
| - |
| 95,000 |
Interest income | - |
| - |
| 122 |
Interest expense | (12,897) |
| (3,150) |
| (49,451) |
Total other income (expense) | 68,553 |
| (3,150) |
| 670,121 |
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Net Loss | $ (49,445) |
| $ (1,443,746) |
| $ (5,888,796) |
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Net Loss Per Share Basic and Diluted | $ - |
| $ (.01) |
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Weighted Average Number of Shares Outstanding | 205,150,264 |
| 191,694,827 |
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The accompanying notes are an integral part of these financial statements.
5
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AMERICAN INTERNATIONAL VENTURES, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||
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| Cumulative From | |||||||
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| January 25, 2012 | ||||||||
Six Month Periods Ended November 30, |
| (Date of Formation) | ||||||||
2013 |
| 2012 |
| To November 30, 2013) | ||||||
Cash Flows From Operating Activities: |
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Net loss | $ (245,398) |
| $ (4,280,295) |
| $ (5,888,796) | |||||
Adjustments to reconcile net loss to net cash consumed by operating activities: |
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Charges not requiring an outlay of cash: |
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Impairment | - |
| - |
| 300,000 | |||||
Depreciation | 51,282 |
| 43,642 |
| 149,969 | |||||
Equity items issued for services | 176,500 |
| 3,762,050 |
| 4,630,300 | |||||
Escrow adjustment | - |
| - |
| 118,000 | |||||
Interest charge related to debt discount | 225 |
| - |
| 434 | |||||
Interest on convertible notes | 9,970 |
| - |
| 9,970 | |||||
Revaluation of warrants | (162,900) |
| - |
| (624,450) | |||||
Changes in assets and liabilities: |
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Increase (decrease) in accounts payable and accrued expenses | 19,493 |
| (7,167) |
| 58,074 | |||||
Increase in convertible notes | - |
| - |
| 10,000 | |||||
Increase in inventory | (49,012) |
| - |
| (49,012) | |||||
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Net cash consumed by operating activities | (199,840) |
| (481,770) |
| (1,285,511) | |||||
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Cash Flows From Investing Activities: |
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Purchases of fixed assets | (5,450) |
| (12,343) |
| (586,917) | |||||
Purchases of mining claims | - |
| - |
| (146,800) | |||||
Advances for escrow | - |
| - |
| (29,000) | |||||
Release from escrow | - |
| 1,000 |
| - | |||||
Cash received as part of reverse recapitalization | - |
| - |
| 38,120 | |||||
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Net cash consumed by investing activities | (5,450) |
| (11,343) |
| (724,597) | |||||
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Cash Flows From Financing Activities: |
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Proceeds from sales of common stock | - |
| 438,750 |
| 1,815,750 | |||||
Proceeds of convertible notes and related deposits | 230,000 |
| - |
| 240,000 | |||||
Payments on notes payable | - |
| (4,408) |
| - | |||||
Payments on financing lease | (5,507) |
| (6,825) |
| (15,997) | |||||
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Net Cash provided by financing activities | 224,493 |
| 427,517 |
| 2,039,753 | |||||
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Net change in cash | 19,203 |
| (65,596) |
| 29,645 | |||||
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Cash balance, beginning of period | 10,442 |
| 71,413 |
| - | |||||
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Cash balance, end of period | $ 29,645 |
| $ 5,817 |
| $ 29,645 |
The accompanying notes are an integral part of these financial statements.
6
AMERICAN INTERNATIONAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2013
1. BASIS OF PRESENTATION
The unaudited interim consolidated financial statements of American International Ventures, Inc. ("the Company") as of November 30, 2013 and for the three and six month periods ended November 30, 2013 and 2012 have been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods. The results of operations for the six month period ended November 30, 2013 are not necessarily indicative of the results to be expected for the full fiscal year ending May 31, 2014.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended May 31, 2013.
2. BACKGROUND
On March 23, 2012, the Company entered into a share exchange agreement with Placer Gold Prospecting, Inc. (PGPI), a Company that was formed on January 25, 2012. This share exchange agreement was treated as a reverse recapitalization, under which the legal acquiree (Placer) was treated as the accounting acquirer and the equity accounts of the Company were adjusted to reflect a reorganization. Inasmuch as Placer was treated as the accounting acquirer, whenever historical financial information is presented, it is Placer information.
On March 7, 2013, the Company formed a subsidiary in Baja, California. It remained inactive until June 1, 2013 at which time it became fully operational, extracting gold from leased mining claims.
3. GOING CONCERN AND LIQUIDITY
As shown in the accompanying financial statements, the Company has experienced losses during the exploration stage of $5,888,796, has a working capital deficiency at November 30, 2013 and presently does not have sufficient resources to meet its outstanding liabilities or accomplish its objectives during the next twelve months. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
4. INVENTORY
The inventory of $49,012 at November 30, 2013 consists solely of gold ore and is stated at the lower of cost as determined by allocating total cost of production among the units produced (an average cost basis) or market.
7
AMERICAN INTERNATIONAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2013
5. CONVERTIBLE NOTES
The following recaps activity during the six month period ended November 30, 2013:
| Principal |
| Related Interest Accrued |
| Maturity Date |
| Conversion Price |
Balance 5/31/13 | $ 35,000 |
| $ - |
| August 31, 2014 |
| $.20 |
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Notes issued during six months: |
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| 95,000 |
| 8,425 |
| August 31, 2014 |
| $.20 |
| 75,000 |
| 1,535 |
| August 31, 2015 |
| $.20 |
| 170,000 |
| 9,970 |
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Balance November 30, 2013 | $205,000 |
| $ 9,970 |
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These notes and related interest are classified based on maturity dates of the convertible notes. | |||||||
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Portion deemed current | $138,425 |
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| August 31, 2014 |
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Portion deemed long-term | 76,545 |
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| August 31, 2015 |
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| $214,970 |
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6. LONG TERM DEBT OBLIGATIONS
As part of the consideration for the acquisition of certain mining claims, the Company issued debt obligations, as follows:
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Claim |
| Current Portion |
| Long - Term |
| Term of Note |
Note for acquisition of Turner Ranch mining claim |
| $ - |
| $ 252,000 |
| Principal due at the end of three years (on April 30, 2015), with interest at 5% per annum |
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Note for acquisition of Golden Eagle #2 mining claim |
| - |
| 67,929 |
| Principal due three years from time of closing of escrow (July 2, 2012); obligation is non interest bearing, but interest has been imputed at 16%; payments of $874 are due each month with balance due at maturity. These payments apply only to interest. |
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Equipment financing |
| 11,133 |
| 32,871 |
| Lease bears interest at 6.55% and is due in monthly installments of $1,175, with the balance due June 1, 2018 |
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| $ 11,133 |
| $ 352,800 |
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8
AMERICAN INTERNATIONAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2013
7. STOCK WARRANT LIABILITY
During the year ended May 31, 2013, the Company issued 2,715,000 warrants to an investment banker, which had "full-ratchet anti-dilution protection". In accordance with pronouncements of the Financial Accounting Standards Board, these warrants have been classified as liabilities. They will be periodically revalued by use of a Black Sholes valuation model. Changes in the value will be recorded on the statement of operations. During the six month period ended November 30, 2013 the value was reduced by $162,900.
8. CAPITAL STOCK
The following is a summary of stock activity during the six month periods ended November 30:
| 2013 |
| 2012 | ||||
| Shares |
| Amount |
| Shares |
| Amount |
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Balance beginning of period | 204,220,044 |
| $ 6,525,920 |
| 188,465,044 |
| $ 1,841,420 |
Shares issued for cash |
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| 3,510,000 |
| 438,750 |
Shares issued to directors | 750,000 |
| 142,500 |
| 300,000 |
| 120,000 |
Shares issued to consultant | 200,000 |
| 34,000 |
| 5,025,000 |
| 1,797,250 |
Other shares issued |
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Mine acquisition |
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| 50,000 |
| 21,500 |
Mine option |
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| 120,000 |
| 48,000 |
Mines not acquired |
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| 1,000,000 |
| 300,000 |
Fair value of options to directors |
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| 495,000 |
Fair value of options issued for services |
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| 1,004,550 |
Balance end of period | 205,170,044 |
| $ 6,702,420 |
| 198,470,044 |
| $ 6,066,470 |
9. SUPPLEMENTARY CASH FLOWS INFORMATION
There was $6,300 cash paid for interest in each of the six month periods ended November 30, 2013 and November 30, 2012: there was $3,150 paid for interest in the three month periods ended November 30, 2013 and 2012. There was no cash paid for income taxes during any of the three or six month periods.
There were no non-cash investing of financing activities during either 2013 or 2012.
10. STOCK WARRANTS
There were 8,780,000 warrants outstanding at November 30, 2013, as presented below:
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Number of Warrants |
| Exercise Price |
| Weighted Life (in Years) |
4,815,000 |
| $ 1.00 |
| .83 |
250,000 | (A) | $ .25 |
| .50 |
2,715,000 | (A) | $ .125 |
| 3.71 |
1,000,000 |
| $ .40 |
| .20 |
(A) These warrants were principally issued for services. They were valued using a Black Scholes valuation model.
9
AMERICAN INTERNATIONAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2013
11. RELATED PARTY TRANSACTIONS
During the six month period ended November 30, 2013, the Company issued 750,000 shares (valued at $142,500) to its directors.
Also, in the six month period ended November 30, 2013, the Company issued $50,000 of convertible notes for cash to the wife of the Chief Executive Officer. These notes bear interest at 16% and are convertible to Company common stock at $.20 per share.
During the three months ended November 30, 2013, the Company's principal shareholder sold 10,000,000 shares to various buyers for $150,000 and directed that the funds be sent to the Company. In return, the Company issued $150,000 in convertible notes ($75,000 of this amount was not issued until December, 2013). Included among the purchasers of the Company stock, was a Director of the Company, who purchased 750,000 shares for $15,000.
During the six month period ended November 30, 2012, the Company issued 300,000 shares (valued at $120,000) to its directors and awarded 1,500,000 options to the directors to purchase Company stock (valued at $495,000).
Also in the six month period ended August 31, 2012, the Company closed from escrow on an acquisition of a 704 acre mining claim previously owned by the Company president and his wife. The Company also issued 2,000,000 shares of common stock and $ 80,000 in connection with the transaction.
12. EXPENSES
Included in administrative expenses are the following:
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| 2013 |
| 2012 |
Consulting expense | $ 34,300 |
| $ 1,807,727 |
Value of warrants issued for services | - |
| 1,004,550 |
Value of option awards to directors | - |
| 495,000 |
Director awards | 142,500 |
| 120,000 |
Value of shares issued for mining claim not acquired | - |
| 300,000 |
Professional fees | 56,695 |
| 24,500 |
Geology expenses | - |
| 78,655 |
Mine option expense | - |
| 48,000 |
Executive compensation | - |
| 40,000 |
Assessments for unpatented claims | 34,382 |
| 30,105 |
Depreciation expense | 24,594 | (A) | 43,642 |
Equipment relocation | - |
| 54,056 |
(A) Portion of $51,282 expense not charged to production.
10
AMERICAN INTERNATIONAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2013
13. SUBSEQUENT EVENTS
On December 5, 2013, the Company received the final proceeds ($15,000) for a $75,000 convertible note which was issued in December, 2013. The initial proceeds ($60,000) are reflected as a deposit liability at November 30, 2013.
On February 4, 2014, the Company completed the sale of certain mining claims to Gold Mining USA, Inc. (OTC -PINK: GMUI) (GMU) in exchange for 5 million shares of common stock of GMU, and the Company reserved a 3% net smelter return. The claims consist of four unpatented claims located in Douglas County, Nevada and are part of eight claims held by the Company known as the Gypsy Gold Mine.
In addition, the parties further agreed that GMU could purchase the remaining four unpatented claims (part of the Gypsy Gold Mine) in exchange for GMU purchasing a convertible debenture in the amount of $1,000,000 from the Company within six months from the closing of the original transaction. The debenture will be convertible into common stock of the Company at $0.15 per share, will bear interest at 16% per annum. The remaining claims, if sold, also are subject to a three percent net smelter return.
On February 3, 2014, the Company filed a lawsuit against third parties in the Superior Court of California, Civil Division, San Diego County. The lawsuit alleges a breach of contract among other allegations, and seeks a return of $ 125,000 paid to the third parties for transporting of equipment. The third parties have refused to deliver the equipment to the Company. As of the date of the filing, the defendants have not filed an answer to the Company's complaint.
11
Forward Looking Statements and Cautionary Statements .
Certain of the statements contained in this Quarterly Report on Form 10-Q includes "forward looking statements." All statements other than statements of historical facts included in this Form 10-Q regarding the Company's financial position, business strategy, and plans and objectives of management for future operations and capital expenditures, and other matters, are forward looking statements. These forward-looking statements are based upon management's expectations of future events. Although the Company believes the expectations reflected in such forward looking statements are reasonable, there can be no assurances that such expectations will prove to be correct. Additional statements concerning important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed in the Cautionary Statements section and elsewhere in the Companys Form 10-K for the period ended May 31, 2013. Readers are urged to refer to the section entitled Cautionary Statements and elsewhere in the Companys Form 10-K for a broader discussion of these statements, risks, and uncertainties. These risks include the Companys limited operations and lack of revenues. In addition, the Companys auditor, in his audit report for the fiscal year ended May 31, 2013, has expressed a going concern opinion about the future viability of the Company. All written and oral forward looking statements attributable to the Company or persons acting on the Companys behalf subsequent to the date of this Form 10-Q are expressly qualified in their entirety by the referenced Cautionary Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Six Months Ended November 30, 2013 compared with the Six Months ended November 30, 2012.
During the six months ended November 30, 2013, the Company, through its subsidiary AIVN de Mexico, commenced limited mining and milling operations on its mining property located in Baja California, Mexico. The claims called the Mother Lode have placer and hard rock mining characteristics, and the Company is currently mining the placer portion of the claims. During the current six month period, the Company recorded $129,961 in revenues from the sale of precious metals, mainly gold. The Company did not have revenues for the comparable period in 2012.
Production cost during the current six month period, consisting of mining, milling and personnel costs, was $105,481. The Company did not incur production costs for the comparable period in 2012.
Gross profit for the current six month period was $24,480. The Company did not have a gross profit for the comparable period in 2012.
Administrative expenses for the six months ended November 30, 2013 were $409,539 compared to $4,273,853 for the comparable period in 2012. Administrative expenses consist primarily of consulting fees, director awards and other services compensated with equity items. The decrease in administrative costs for the current period from the prior period is due principally to the reduction in consulting expense ($1,773,427), the absence of the cost of warrants issued for services ($1,004,550 in the 2012 year) and the absence of director options ($495,000 in the 2012 year).
During the current six month period, the Company had income in the amount of $162,900 from the revaluation of stock warrants classified as liabilities. These warrants are periodically revalued to reflect the fair value and adjusted on the Companys statement of operations. A similar item was not recorded for the comparable 2012 period. Interest expense for the current six month period was $23,239 compared with $6,496 for the comparable period in 2012. The change in the interest expense is due to an increase in convertible notes that bear interest at 16%.
Net Loss for the current six month period was $245,398 compared with a loss of $4,280,295 for the comparable period in 2012. The significant decrease is due to the reasons described above.
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Three Months Ended November 30, 2013 compared with the Three Months ended November 30, 2012.
During the three month period ended November 30, 2013, the Company recorded $28,550 in revenues from the sale of precious metals, mainly gold. The Company did not have revenues for the comparable period in 2012.
Production costs during the current three month period, consisting of mining, milling and personnel costs, was $17,822. The Company did not incur production costs for the comparable period in 2012.
Gross profit for the current three month period was $10,728. The Company did not have a gross profit for the comparable period in 2012.
Administrative expenses for the three months ended November 30, 2013 were $128,726 compared to $1,440,596 for the comparable period in 2012. Administrative expenses consist primarily of consulting fees, director awards of Company stock and grants to purchase additional Company stock and other stock based compensation. The $1,311,870 decrease in administrative costs for the current period from the prior period is due principally to the reduction in consulting expense ($411,701), and the absence of director options ($495,000 in 2012) and the absence of significant other items compensated by stock.
During the current three month period, the Company had income in the amount of $81,450 from the revaluation of warrants. A similar item was not recorded for the comparable 2012 period. Interest expense for the current three month period was $12,897 compared with $3,150 for the comparable period in 2012. The additional interest expense primarily reflects an increase in convertible notes.
Net Loss for the current three month period was $49,455 compared with a loss of $1,443,746 for the comparable period in 2012. The significant decrease is due to the reasons described above.
Liquidity and Capital Resources.
Since the acquisition of Placer Gold Prospecting, Inc. in March 2012, our operations have focused on developing, planning and operating past producing precious metal properties and mines. Specifically, we are now a gold and silver exploration and extraction company, operating primarily in Baja California, Mexico and Nevada.
None of our properties or claims has any proven or probable reserves and all of our activities undertaken and currently proposed are exploratory in nature.
As of November 30, 2013, the Company had a working capital deficit of $ 210,764, compared with a working capital deficit of $95,972 as of May 31, 2013. The increase in working capital deficit for the current period is due to increases in convertible notes and related deposits during the current period.
The Company has projected that its administrative overhead for the next 12 months will be approximately $165,000 which consists of accounting fees (including tax, audit and review) in the approximate amount of $25,000, legal fees in the approximate amount of $40,000, and miscellaneous expenses of $100,000. The projected legal and accounting fees relate to the Companys reporting requirements under the Securities Exchange Act of 1934. The Company expects to incur addition legal and accounting fees in order to effect acquisition and share exchange or a business combination transaction. The Company has no other capital commitments. To continue its business plan, the Company will be required to raise additional funds through the private placement of its capital stock or through debt financing to meet its ongoing corporate overhead obligations. If the Company is unable to meet its corporate overhead obligations, it will have a material adverse impact on the Company and the Company may not be able to complete its plan of operations of finding a suitable business acquisition or combination candidate.
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Please refer to the Companys Form 10-K for the period ending May 31, 2013 for a discussion of other risks attendant to its proposed plan of operations of effecting a business acquisition or combination, including the occurrence of significant dilution and a change of control. Even if successful in effecting a business acquisition or combination, it is likely that numerous risks will exist with respect to the new entity and its business.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues and results of operations, liquidity or capital expenditures
Significant Accounting Policies
a. Cash
For purposes of the Statement of Cash Flows, the Company considers all short-term debt securities purchased with an original maturity of three months or less to be cash equivalents.
b. Fair Value of Financial Instruments
The carrying amounts of the Companys financial instruments, which include cash equivalents, and accrued liabilities, approximate their fair values at November 30, 2013.
c. Loss (Income) Per Share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common shareholders for the period by the weighted average number of shares outstanding. During periods when a net loss has occurred, as was the case in the three and six month periods ended November 30, 2013, outstanding options and warrants are excluded from the calculation of diluted loss per share as their inclusion would be anti-dilutive.
d. Income Taxes
The Company accounts for income taxes in accordance with current accounting guidance, which requires the use of the liability method. Accordingly, deferred tax liabilities and assets are determined based on differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the income that is currently taxable.
e. Marketable Securities
Marketable securities, when owned, are classified as available-for-sale and are carried at fair value. Unrealized gains and losses on these securities are recognized as direct increases or decreases in accumulated other comprehensive income.
f. Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed by using accelerated methods, with useful lives of seven years for furniture and equipment and five years for computers and automobiles.
g. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
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h. Advertising Costs
The Company expenses advertising costs when the advertisement occurs. There was no advertising expense in the three or six month periods ended November 30, 2013.
i. Segment Reporting
The Company is organized in one reporting and accountable segment.
j. Revenue Recognition
Revenue is recognized when persuasive evidence exists, such as when a purchase order or contract is received from a customer, title to the goods has passed, and there is reasonable assurance of collection.
Recent Events
On February 4, 2014, the Company completed the sale of certain mining claims to Gold Mining USA, Inc. (OTC -PINK: GMUI) (GMU) in exchange for 5 million shares of common stock of GMU and the Company reserves a 3% net smelter return. The claims consist of four unpatented claims located in Douglas County, Nevada and are part of eight claims held by the Company known as the Gypsy Gold Mine.
In addition, the parties further agreed that GMU could purchase remaining four unpatented claims (part of the Gypsy Gold Mine) in exchange for GMU purchasing a convertible debenture in the amount of $1,000,000 from the Company within six months from the closing of the original transaction. The debenture is convertible into common stock of the Company at $0.15 per share, and bears interest at 16% per annum. The remaining claims, if sold, also are subject to a three percent net smelter return.
On February 3, 2014, the Company filed a lawsuit against third parties in the Superior Court of California, Civil Division, San Diego County. The lawsuit alleges a breach of contract among other allegations, and seeks a return of $ 125,000 paid to the third parties for the transporting of equipment. The third parties have refused to deliver the equipment to the Company. As of the date of the filing, the defendants have not filed an answer to the Company's complaint.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable. Smaller Reporting Companies are not required to provide the information required by this item.
Item 4. Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (one and the same person), we undertook an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934, Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that such disclosure controls and procedures were not effective to ensure (a) that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (b) that information required to be disclosed is accumulated and communicated to management to allow timely decisions regarding disclosure.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the quarter ended November 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors.
As a Smaller Reporting Company, we are not required to provide the information required by this item.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Mining operations and properties in the United States are subject to regulation by the Federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (the Mine Act). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), issuers are required to disclose specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities.
During the three month periods ending November 30, 2013 and, 2012, we did not conduct mining operations nor maintain any mining properties in the US. Consequently we were not subject to any health or safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities during the three month periods ending November 30, 2013 and, 2012.
Item 5. Other Information.
On February 4, 2014, the Company completed the sale of certain mining claims to Gold Mining USA, Inc. (OTC -PINK: GMUI) (GMU) in exchange for 5 million shares of common stock of GMU and the Company reserves a 3% net smelter return. The claims consist of four unpatented claims located in Douglas County, Nevada and are part of eight claims held by the Company known as the Gypsy Gold Mine.
In addition, the parties further agreed that GMU could purchase remaining four unpatented claims (part of the Gypsy Gold Mine) in exchange for GMU purchasing a convertible debenture in the amount of $1,000,000 from the Company within six months from the closing of the original transaction. The debenture is convertible into common stock of the Company at $0.15 per share, and bears interest at 16% per annum. The remaining claims, if sold, also are subject to a three percent net smelter return.
On February 3, 2014, the Company filed a lawsuit against third parties Superior Court of California, Civil Division, San Diego County. The lawsuit alleges a breach of contract, among other allegations, and seeks a return of $125,000 paid to the third parties for the purchase of equipment. The third parties have refused to deliver the equipment to the Company. As of the date of this filing, the defendants have not filed an answer to the Companys complaint.
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Item 6. Exhibits
(a) Exhibits Furnished.
Exhibit 31.1 Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002, Principal Executive Officer.
Exhibit 31.2 Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002, Principal Financial Officer.
Exhibit 32 Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002.
The following exhibits contain information from our Quarterly Report on Form 10-Q for the quarter ended , November 30, 2013 formatted in Extensible Business Reporting Language (XBRL):
Exhibit 101.INS XBRL Instance Document *.
Exhibit 101.SCH XBRL Taxonomy Schema Document.*
Exhibit 101.CAL XBRL Taxonomy Calculation Linkbase Document. *
Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase *
Exhibit 101.LAB XBRL Taxonomy Label Linkbase Document. *
Exhibit 101.PRE XBRL Taxonomy Presentation Linkbase Document. *
*In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN INTERNATIONAL VENTURES, INC.
(Registrant)
By: /s/ Jack Wagenti
___________________________________
Jack Wagenti
Chairman, President and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)
Date: March 17, 2014
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