UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2010
Commission file number 333-135354
OROFINO GOLD CORP.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 98-0453936
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
93-B342 Xinliu Street, Zhong Shan District
Dalian 116001, China
(Address of Principal Executive Offices & Zip Code)
011-86 411 8272 6933
(Telephone Number)
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
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 preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of August 31, 2010 the registrant had 70,200,000 shares of common stock
issued and outstanding.
OROFINO GOLD CORP.
TABLE OF CONTENTS
Item 1. Business............................................................ 3
Item 1A. Risk Factors........................................................ 5
Item 2. Properties.......................................................... 12
Item 3. Legal Proceedings................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders................. 13
Item 5. Market for Common Equity and Related Stockholder Matters............ 13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 14
Item 8. Financial Statements................................................ 16
Item 9. Changes in and Disagreements with Accountants on Financial
Disclosure......................................................... 26
Item 9A. Controls and Procedures............................................. 26
Item 10. Directors, Executive Officers and Control Persons................... 27
Item 11. Executive Compensation.............................................. 29
Item 12. Security Ownership of Certain Beneficial Owners and Management...... 29
Item 13. Certain Relationships and Related Transactions...................... 30
Item 14. Principal Accounting Fees and Services.............................. 30
Item 15. Exhibits............................................................ 31
Signatures................................................................... 31
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ITEM 1. BUSINESS
SUMMARY
COMPANY OVERVIEW
Orofino Gold Corp. was founded in the State of Nevada on April 12, 2005. Orofino
Gold Corp. ("Orofino" or "SNT" or the "Company") was organized under the laws of
the State of Nevada on April 12, 2005 as SNT Networks Inc. On April 22, 2008 the
company changed its corporate name to SNT Cleaning Inc.
Orofino Gold Corp. started operations on September 1, 2007 as an automotive
cleaning & detailing business, specifically specializing in the cleaning,
detailing, and polishing for automobiles, recreational vehicles, vans, and
trucks.
Orofino is a development stage company and has a limited history of operations.
We presently do not have the funding required to fully execute our business plan
or build name recognition. We plan to raise additional capital at a future date
to develop and build our business.
Orofino Gold Corp. started operations on September 1, 2007 under the "Clean `N
Shine" name. Prior to this, the company had no operations from inception (April
12, 2005) to August 31, 2007. On September 1, 2007, Orofino began operating as a
full service automotive car wash, cleaning, detailing, and polishing business.
The company has generated revenues from cleaning and car care services
specifically, automotive upholstery and leather cleaning and automotive interior
and exterior cleaning and washing. The Company has no competition in the
immediate area of its operations, but outside of that area it is deemed to be a
competitive business. Without significant capital it would be very difficult to
build and grow this business. Accordingly the Company has decided to look at
mineral resources as an alternative business where opportunity exists.
On May 20, 2009, the Company completed a forward stock split of its common stock
on a ratio of six shares for every one share of the Company. The record date of
the forward stock split was May 15, 2009, the payment date of the forward split
was May 19, 2009, and the ex-dividend date of the forward split was May 20,
2009. The forward split was payable as a dividend, thereby requiring no action
by shareholders, nor any amendment to the articles of incorporation of the
Company. As a result of the forward split, the post forward split number off
issued and outstanding shares was 60,000,000.
There are no preferred shares authorized. The Company has issued no preferred
shares. The Company has no stock option plan, warrants or other dilutive
securities. We are contemplating raising additional capital to finance our
business. No final decisions regarding the financing have been made at this
time.
The Company started operations on September 1, 2007. Prior to this, the company
had no operations from inception (April 12, 2005) to August 31, 2007. On
September 1, 2007 the company began operating as a full service automobile car
wash and cleaning business.
On December 5, 2009, the Company passed a resolution to change its name from
Orofino Gold Corp. to Orofino Gold Corp.
Over the last year ending May 31, 2010 the company has employed casual part-time
labor, as required. The business is a car wash company in the local region that
provides complete auto detailing services. Presently there are no car wash
companies in our local region that provide full service automobile-detailing
operations. Our company is set up to specialize in automotive cleaning,
polishing and detailing services. The Company provides its clientele with a
number of cleaning alternatives, as well as customized work based on the needs
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of each client. The cleaning services range from basic cleaning and simple wash
& vacuum services to a full service Car wash and vehicle detailing. Vehicle
detailing services include buffing, cutbacks, shampooing, leather care, fabric
care and paint protection.
The company accepts work by appointment as well as "drive-in" service, if room
is available. The Company's services range from basic to extensive cleaning and
detailing services. The Company also does customized work based on the needs of
the client.
On December 23, 2009, the Company engaged the services of a consultant and was
prepared to enter into an arrangement for a joint venture-earn-in to option
three mining concessions comprising the Sur de Bolivar Group of Gold Properties
San Carlos Project - Senderos de Oro Project. After payments of $100,000 to the
consultant the Company entered into a letter of intent for an option to acquire
a 55% interest in each of the three mining concessions. The agreement was signed
on April 6, 2010 and modified on August 15, 2010. The payment terms and ongoing
payment obligations are as follows:
CASH PAYMENTS: (APRIL 6, 2010 TERMS)
1. $250,000 as an initial option payment;
2. $250,000 on or before July 15, 2010;
3. $500,000 on the first anniversary;
4. $625,000 on the second anniversary;
5. $1,250,000 on the third anniversary;
6. $1,250,000 on the fourth anniversary; and
7. $2,500,000 on the fifth anniversary date.
WORK COMMITMENTS:
The Company shall invest at least $10 million in the exploration and development
of the properties for the purpose of the exploitation of the mineral potential
or bring the project to a bankable feasibility study within five years of the
anniversary date of which one million dollars are to be spent within one year.
CASH PAYMENTS: (MODIFIED ON AUGUST 15, 2010)
1. $250,000 as an initial option payment;
2. $500,000 on or before October 31, 2010;
3. $750,000 on the first anniversary;
4. $1,000,000 on the second anniversary;
5. $1,250,000 on the third anniversary;
6. $1,250,000 on the fourth anniversary; and
7. $2,500,000 on the fifth anniversary date.
SHARES
The vendor may accept common shares of Orofino Gold Corp. in lieu of the cash
payment due on or before October 31, 2010 or a portion thereof at the rate of
$0.05 per share.
BANKRUPTCY OR SIMILAR PROCEEDINGS
We have not been the subject of a bankruptcy, receivership or similar
proceedings.
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RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our
incorporation.
PATENTS AND TRADEMARKS
We do not own any patents or trademarks.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-K for a small business issuer under the Securities Exchange Act of
1934. We are subject to disclosure filing requirements including filing Form 10K
annually and Form 10Q quarterly. In addition, we will file Form 8K and other
proxy and information statements from time to time as required. We do not intend
to voluntarily file the above reports in the event that our obligation to file
such reports is suspended under the Exchange Act. The public may read and copy
any materials that we file with the Securities and Exchange Commission, ("SEC"),
at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
ITEM 1A. RISK FACTORS
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK AND ANY PROSPECTIVE
SHAREHOLDER SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN EVALUATING THE
COMPANY AND ITS BUSINESS.
IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE SERIOUSLY HARMED. THE TRADING PRICE OF OUR SHARES
OF COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR
PART OF YOUR INVESTMENT.
THE COMPANIES SECURITIES ARE SPECULATIVE BY NATURE AND INVOLVE AN EXTREMELY HIGH
DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE
THEIR ENTIRE INVESTMENT. THE FOLLOWING KNOWN RISK FACTORS COULD CAUSE OUR ACTUAL
FUTURE OPERATING RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD LOOKING STATEMENTS, ORAL OR WRITTEN, MADE BY OR ON BEHALF OF US. IN
ASSESSING THESE RISKS, WE SUGGEST THAT YOU ALSO REFER TO OTHER INFORMATION
CONTAINED IN THIS DOCUMENT, INCLUDING OUR FINANCIAL STATEMENTS AND RELATED
NOTES.
RISK FACTORS
(A) RISKS RELATED TO OUR BUSINESS
THE COMPANY HAS A LIMITED OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF
ITS BUSINESS AND PROSPECTS. WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO GROW OUR
BUSINESS AND TO EARN INCREASED REVENUES. AN INVESTMENT IN OUR SECURITIES
REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
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We have a limited history of operations and we may not be successful in our
efforts to grow our business and to increase revenues. Our business and
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly our car cleaning business. Sales and operating results are
difficult to forecast because they generally depend on the volume and timing of
the amount of business transacted - the frequency of which is uncertain. As a
result, management may be unable to adjust its spending in a timely manner to
compensate for any unexpected revenue shortfall. This inability could cause net
losses in a given period to be greater than expected. An investment in our
securities represents significant risk and you may lose all or part your entire
investment.
WE HAVE A HISTORY OF LOSSES. FUTURE LOSSES AND NEGATIVE CASH FLOW MAY LIMIT OR
DELAY OUR ABILITY TO BECOME PROFITABLE. IT IS POSSIBLE THAT WE MAY NEVER ACHIEVE
PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND
YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
We have yet to establish profitable operations or a history of profitable
operations. We anticipate that we will continue to incur substantial operating
losses for an indefinite period of time due to the significant costs associated
with the development of our business.
Since incorporation, we have expended financial resources on the development of
our business. As a result, losses have been incurred since incorporation.
Management expects to experience operating losses and negative cash flow for the
foreseeable future. Management anticipates that losses will continue to increase
from current levels because the Company expects to incur additional costs and
expenses related to: brand development, marketing and promotional activities;
the possible addition of new personnel; and the development of relationships
with strategic business partners.
The Company's ability to become profitable depends on its ability to generate
and sustain sales while maintaining reasonable expense levels. If the Company
does achieve profitability, it cannot be certain that it would be able to
sustain or increase profitability on a quarterly or annual basis in the future.
An investment in our securities represents significant risk and you may lose all
or part your entire investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
We will need to obtain additional financing in order to complete our business
plan because we currently do not have any operations and we have no income. We
do not have any arrangements for financing and we may not be able to find such
financing if required. Obtaining additional financing would be subject to a
number of factors, including investor sentiment. These factors may adversely
affect the timing, amount, terms, or conditions of any financing that we may
obtain or make any additional financing unavailable to us. If we do not obtain
additional financing our business will fail. Please note that the proceeds from
the sale of the securities offered in this registration statement will go
directly to the selling shareholder and not to the Company. As such, this
offering might negatively affect the Company's ability to raise needed funds
through a primary offering of the Company's securities in the future.
OUR OPERATING RESULTS WILL BE VOLATILE AND DIFFICULT TO PREDICT. IF THE COMPANY
FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY.
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Management expects both quarterly and annual operating results to fluctuate
significantly in the future. Because our operating results will be volatile and
difficult to predict, in some future quarter our operating results may fall
below the expectations of securities analysts and investors. If this occurs, the
trading price of our common stock may decline significantly.
A number of factors will cause gross margins to fluctuate in future periods.
Factors that may harm our business or cause our operating results to fluctuate
include the following: the inability to obtain new customers at reasonable cost;
the ability of competitors to offer new or enhanced services or products; price
competition; the failure to develop marketing relationships with key business
partners; increases in our marketing and advertising costs; increased fuel costs
and increased labour costs that can affect demand for cleaning equipment; the
amount and timing of operating costs and capital expenditures relating to
expansion of operations; a change to or changes to government regulations;
seasonality and a general economic slowdown. Any change in one or more of these
factors could reduce our ability to earn and grow revenue in future periods.
THE COSTS OF BEING A PUBLIC COMPANY WILL PUT A STRAIN ON OUR RESOURCES
We are subject to the reporting requirements of the Securities Exchange Act of
1934, or the "Exchange Act," and the Sarbanes-Oxley Act of 2002. The Exchange
Act requires that we file annual, quarterly and current reports with respect to
our business and financial condition. The Sarbanes-Oxley Act requires that we
maintain effective disclosure controls and procedures and internal control for
financial reporting. These requirements will place a strain on our systems and
resources as well as add additional costs to our business in complying with
these regulations. The cost and effort required to stay compliant with these
regulations will divert management's attention from other business concerns,
which could have a material adverse effect on our business, financial condition,
results of operations and cash flows. If we are unable to conclude that our
disclosure controls and procedures and internal control over financial reporting
are effective, or if our independent public accounting firm is unable to provide
us with an unqualified report as to the effectiveness of our internal control
over financial reporting in future years, investors may lose confidence in our
business and the value of our stock may decline.
(B) RISKS RELATED TO THE MINERAL EXPLORATION AND DEVELOPMENT BUSINESS
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION AND DEVELOPMENT, THERE IS A
SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL. The search for valuable natural
resources as a business is extremely risky. We can provide investors with no
assurance that the properties we have in Colombia contain commercially
exploitable reserves. Exploration for natural reserves is a speculative venture
involving substantial risk. Few properties that are explored are ultimately
developed into producing commercially feasible reserves. Problems such as
unusual or unexpected formations and other conditions are involved in mineral
exploration and often result in unsuccessful exploration efforts. In such a
case, we would be unable to complete our business plan.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE DUE TO OUR INABILITY TO PREDICT THE SUCCESS OF OUR BUSINESS
We are in the initial stages of exploration of our mineral concessions and thus
have no way to evaluate the likelihood that we will be able to operate our
business successfully. To date have been involved primarily in organizational
activities, and the acquisition and exploration of the mineral concessions. We
have not earned any revenues as of the date of this report.
BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL
EXPLORATION AND THE MINING BUSINESS, WE FACE A HIGH RISK OF BUSINESS FAILURE
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Potential investors should be aware of the difficulties normally encountered by
early-stage mineral exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.
In addition, the search for valuable minerals involves numerous hazards. As a
result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. The payment of such liabilities may have a
material adverse effect on our financial position.
BECAUSE WE ANTICIPATE OUR OPERATING EXPENSES WILL INCREASE PRIOR TO OUR EARNING
REVENUES, WE MAY NEVER ACHIEVE PROFITABILITY
Prior to completion of our exploration stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. Therefore, we
expect to incur significant losses into the foreseeable future. We recognize
that if we are unable to generate significant revenues from the exploration of
our mineral claims we will not be able to earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
BECAUSE ACCESS TO OUR MINERAL CLAIMS MAY BE RESTRICTED BY INCLEMENT WEATHER, WE
MAY BE DELAYED IN OUR EXPLORATION
Access to our mineral properties may be restricted through some of the year due
to weather in the area. As a result, any attempt to test or explore the property
is largely limited to the times when weather permits such activities. These
limitations can result in significant delays in exploration efforts. Such delays
can have a significant negative effect on our results of operations.
AS WE UNDERTAKE EXPLORATION OF OUR MINERAL CLAIMS, WE WILL BE SUBJECT TO
COMPLIANCE WITH GOVERNMENT REGULATION THAT MAY INCREASE THE ANTICIPATED COST OF
OUR EXPLORATION PROGRAMS
There are several governmental regulations that materially restrict mineral
exploration. We may be required to obtain work permits, post bonds and perform
remediation work for any physical disturbance to the land in order to comply
with these laws. While our planned exploration program budgets for regulatory
compliance, there is a risk that new regulations could increase our costs of
doing business and prevent us from carrying out our exploration programs.
(C) RISKS RELATED TO THE AUTOMOTIVE CLEANING INDUSTRY
OUR INDUSTRY IS COMPETITIVE AND IS CHARACTERIZED BY LOW PROFIT MARGINS AND HIGH
FIXED COSTS, A MINOR SHORTFALL FROM EXPECTED REVENUE COULD AFFECT THE DEMAND FOR
OUR SERVICES, HAVE A SIGNIFICANT IMPACT ON OUR ABILITY TO GENERATE REVENUE, AND
POSSIBLY CAUSE OUR BUSINESS TO FAIL.
Our industry is competitive. Our competitors who provide car wash packages
compete for our business. Aggressive marketing tactics implemented by our
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competitors could impact our limited financial resources and adversely affect
our ability to compete in our market.
UNFORESEEN FUTURE ENVIROMENTAL REGULATIONS COULD CAUSE OUR OPERATING COSTS TO
INCREASE, ADVERSELY IMPACT OUR OPERATING RESULTS, AND POSSIBLY CAUSE OUR
BUSINESS TO FAIL.
Our industry is concerned with environmental issues, specifically the
cleanliness and conservation of our finite water resources.
Waste water along with cleaning solvents and chemicals generated from car
washing, is discharged directly into storm sewers carrying contaminants directly
into our local water-ways. The chemicals used by the washing process and
discharged in storm sewers could be seen as environmentally unsafe by
environmental bodies and affect future operations of our business. While there
are currently no regulations on the disposal of contaminated water, future
environmental regulations may be legislated by government that could adversely
affect how we discharged wastewater. Our company is at risk to any number of
future environmental regulations imposed by government bodies. Any future
environmental regulations that we may have to comply with may change the way we
operate our business and add unforeseen costs to our business.
UNFORESEEN INDUSTRY TRENDS COULD ADVERSELY IMPACT OUR OPERATING RESULTS.
Industry efforts are focused upon improving the quality of existing methods of
auto washing and detailing, however unforeseen industry trends could adversely
impact operation results and subsequently cause our business to fail.
OUR QUARTERLY RESULTS ARE SIGNIFICANTLY AFFECTED BY MANY FACTORS, AND OUR
RESULTS OF OPERATIONS FOR ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF OUR
ANNUAL RESULTS OF OPERATIONS. THE COMPANY HAS A LIMITED OPERATING HISTORY UPON
WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. IT IS POSSIBLE THAT
WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS
SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
Our proposed operations are subject to a variety of factors that frequently
cause considerable volatility in our earnings, including:
* increases in the price for fuel, security and insurance costs
* general economic trends
* the prosperity of the automotive, transportation, tourism and
recreation industries
In addition, seasonal variations in traffic and expenditures could affect our
operating results from quarter to quarter. Seasonality can affect demand for
cleaning and washing automobiles and, hence our potential sales from quarter to
quarter. Our results of operations in any one quarter are not necessarily
indicative of our annual results of OPERATIONS. It is possible that we may never
earn enough revenue to achieve profitability. An investment in our securities
represents significant risk and you may lose all or part your entire investment.
(D) RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES
THE TRADING PRICE OF OUR COMMON STOCK MAY DECREASE DUE TO FACTORS BEYOND OUR
CONTROL. THESE FACTORS MAY RESULT IN SUBSTANTIAL LOSSES TO INVESTORS IF
INVESTORS ARE UNABLE TO SELL THEIR SHARES AT OR ABOVE THEIR PURCHASE PRICE.
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The trading price of our common stock is subject to significant fluctuations due
to a number of factors, including:
* our status as a development stage company with a limited operating
history
* limited revenues to date, which may make risk-averse investors more
inclined to sell their shares on the market more quickly and at
greater discounts than may be the case with the shares of a seasoned
issuer in the event of negative news or lack of progress and
announcements of new products by us or our competitors
* the timing and development of products and services that we may offer
* general and industry-specific economic conditions
* actual or anticipated fluctuations in our operating results
* our capital commitments
* the loss of any of our key management personnel
In addition, the financial markets have experienced extreme price and volume
fluctuations. The market prices of the securities of similar companies have been
highly volatile and may continue to be highly volatile in the future, some of
which may be unrelated to the operating performance of particular companies.
The sale or attempted sale of a large amount of common stock into the market may
also have a significant impact on the trading price of our common stock. Many of
these factors are beyond our control and may decrease the market price of our
common stock, regardless of our operating performance. In the past, securities
class action litigation has often been brought against companies that experience
volatility in the market price of their securities. Whether or not meritorious,
litigation brought against us could result in substantial costs, divert
management's attention and resources and harm our financial condition and
results of operations.
WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE
YOUR OWNERSHIP INTEREST AND VOTING RIGHTS.
We will need to raise additional capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the holders of our common stock. The issuance of additional
common stock or securities convertible into common stock will also have the
effect of diluting the proportionate equity interest and voting power of holders
of our common stock.
OUR INCORPORATION DOCUMENTS AND NEVADA LAW INCLUDE PROVISIONS THAT MAY INHIBIT
AN ATTEMPT BY OUR SHAREHOLDER TO CHANGE OUR DIRECTION OR MANAGEMENT, OR MAY
INHIBIT A POSSIBLE TAKEOVER THAT SHAREHOLDERS CONSIDER FAVORABLE. THE OCCURRENCE
OF SUCH EVENTS COULD LIMIT THE MARKET PRICE OF YOUR STOCK.
Our certificate of incorporation and bylaws contain provisions that could delay
or prevent a change in control of our company, such as prohibiting cumulative
voting in the election of directors, which would otherwise allow less than a
majority of shareholders to elect director candidates. In addition, we are
governed by the provisions of Section 203 of Nevada General Corporate Law. These
provisions may prohibit large shareholders from merging or combining with us,
which may prevent or frustrate any attempt by our shareholders to change our
management or the direction in which we are heading. These and other provisions
in our amended and restated certificate of incorporation and bylaws and under
Nevada law could reduce the price that investors might be willing to pay for
shares of our common stock in the future and result in the market price being
lower than it would be without these provisions.
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WE WILL NEED TO RAISE ADDITIONAL CAPITAL AND, IN SO DOING, WILL FURTHER DILUTE
THE TOTAL NUMBER OF SHARES ISSUED AND OUTSTANDING.
We will need to raise additional capital, in addition to the financing as
reported in this registration statement, by issuing additional shares of common
stock and will, thereby, increase the number of common shares outstanding. There
can be no assurance that this additional capital will be available and, if the
capital is available at all, that it will be available on terms acceptable to
the Company. The issuances of additional equity securities by the Company may
result in a significant dilution in the equity interests of its current security
holders. Alternatively, we may have to borrow large sums, and assume debt
obligations that require us to make substantial interest and capital payments.
If we are able to raise additional capital, we cannot assure that it will be on
terms that enhance the value of our common shares. If the Company is unable to
obtain financing in the amounts and on terms deemed acceptable, the business and
future success of the Company will almost certainly be adversely affected.
WE ARE DEPENDENT ON KEY PERSONNEL.
The Company's success will largely rely on the efforts and abilities of certain
key personnel. While the Company does not foresee any reason why such key
personnel will not remain with the Company, if for any reason they do not, the
Company could be adversely affected. The Company has not purchased key man life
insurance for any of these individuals.
AN ACTIVE TRADING MARKET FOR OUR COMMON SHARES MAY NOT DEVELOP.
Our common shares are new issues of securities with no established trading
markets or prior trading histories, and there can be no assurance regarding the
future development of markets for our common shares, the ability of holders of
our common shares to sell or the prices for which holders may be able to sell
their holdings of our common shares. Furthermore, the liquidity of, and trading
markets for, our common shares may be adversely affected by changes in the car
cleaning industry and in the overall economy, as well as by any changes in our
financial condition or results of operations.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND THE NASD'S SALES PRACTICE REQUIREMENTS, WHICH MAY
LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our common stock is presently considered to be a "penny stock" and is subject to
SEC rules and regulations which impose limitations upon the manner in which such
shares may be publicly traded and regulates broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules which may increase the difficulty investors may experience in
attempting to liquidate such securities.
11
FORWARD-LOOKING STATEMENTS
This Form 10-KSB contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons.
ITEM 2. PROPERTIES
We currently do not own any physical property or own any real property.
MINERAL CONCESSIONS
LOCATION AND ACCESS:
The Senderos de Oro volcanic-plutonic hosted Au-Ag+/-Cu occurrences are located
in the Department of Bolivar, CA. 300 km NE of Medellin, at the northern end of
Serrania de San Lucas. Access to the area requires five hours of overland
travel, from airports at Ocana or Bucaramanga, along good paved highways and
all-season secondary road systems. Entrance may be facilitated by the
reclamation 1000 metre airstrip located within a short distance to the
concession area. Electrical energy supplies the active mine areas, as does
direct road access to various ports on the nearby Magdalena River. MINERO
(small-scale miner) activity beginning in the mid-1980's has outlined a series
of rich gold occurrences extending from Cerro San Carlos to San Martin de Loba,
some 50 km to the north.
Government recorded gold production from the region, between 1987 and 1994 is
CA. 1,271,000 ounces Au. All production is artisanal in nature, and production
continues to this day.
GEOLOGY AND MINERALIZATION:
At the first concession, a mixed sequence of predominantly volcanic rocks of
intermediate to felsic composition, including lithic and crystal agglomerates
and tuffs, and cherty "sinters" and phreatic-style breccias are observed. These
rocks overlie gneissic basement, and are intruded by plutons of granodioritic
composition. Structural considerations indicate it is contained within an
east-west striking normal fault bound corridor. Two types of mineralization are
observed in the concession area;
1) Silicification and extensive finely fracture dispersed Au
mineralization.
2) Cu-Au veinlets and fractures hosted within plutonic/basement complex
rocks.
EXPLORATION AND ANALYTICAL RESULTS:
IN SITU soil geochemistry over the entire area on one concession has outlined an
anomaly measuring some 1,700 m by 450 m, which averages upwards of 220 ppb gold.
On the second concession chip samples of Cu-Au mineralization on the northern
flank of the soil anomaly ranged from 3 to 68 g Au/tonne, and contained up to 8%
Cu as chalcocite, bornite and chalcopyrite.
The observed metallogenic zonation around Senderos de Oro evokes a very viable
"hidden porphyry" exploration model. Based upon exploration carried out to date,
it is clear that the area hosts significant resources of gold, copper and
silver, which, facilitated by the current database and favorable topography, has
generated excellent "fast-trackable" bulk-tonnage or high-grade underground
Au-Ag-Cu exploration targets.
12
The Company has received glowing reports from technical personnel having visited
the concessions and expects that favorable results can be obtained. Before the
Company moves ahead with any further geological programs it is presently
obtaining information and doing due diligence on the ownership of the mineral
concessions in Colombia. The Company is obtaining legal opinions and technical
opinions on the ownership of the concessions and also a recommended program of
conducting business in the concession area.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders during the
year ended May 31, 2010.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PUBLIC MARKET FOR COMMON STOCK
Our common stock is listed for trading under the symbol "ORFG".
As of the date of this report we have approximately 25 shareholders of record.
We have paid no cash dividends and have no outstanding options. We have no
securities authorized for issuance under equity compensation plans.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or quotation system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document prepared by the SEC, that: (a)
contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading; (b) contains a
description of the broker's or dealer's duties to the customer and of the rights
and remedies available to the customer with respect to a violation to such
duties or other requirements of Securities' laws; (c) contains a brief, clear,
narrative description of a dealer market, including bid and ask prices for penny
stocks and the significance of the spread between the bid and ask price; (d)
contains a toll-free telephone number for inquiries on disciplinary actions; (e)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (f) contains such other information and is in such
form, including language, type, size and format, as the SEC shall require by
rule or regulation. The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
13
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock if it becomes subject to these
penny stock rules. Therefore, if our common stock becomes subject to the penny
stock rules, stockholders may have difficulty selling those securities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This section of this report includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of our report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions. We are a development stage company
and have not developed significant revenue to date to attain profitability.
RESULTS OF OPERATIONS
We are still in the development stage and have generated minimum revenues to
date.
We incurred operating expenses of $565,620 for the year ended May 31, 2010.
These expenses consisted of general operating expenses and professional fees
incurred in connection with the day to day operation of our business and the
preparation and filing of our periodic reports and for year ends. Our net loss
for the year ending May 31, 2009 was $564,808. The main expense is mineral
exploration expense of $406,168. In regards to the mineral concessions in
Colombia, the Company incurred a cost of $100,000 paid to a person in the United
States for the initial introduction of the mineral concessions and $250,000 paid
to the concession holders as the initial payments to pursue an option agreement.
The balance of the expense was the cost of geologists and technical staff on the
property in Colombia. The Company is continuing to perform due diligence on the
mineral titles to ensure that proper ownership can be established.
The following table provides selected financial data about our company for the
years ended May 31, 2010 and 2009.
Balance Sheet Data: 5/31/10 5/31/09
------------------- ------- -------
Cash $ 0 $ 0
Total assets $ 1,252 $ 1,091
Total liabilities $629,423 $ 66,421
Shareholders' deficit $625,171 $ 65,330
|
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at May 31, 2010 was $0 with outstanding liabilities of
$629,423. Management believes our current cash balance will be unable to sustain
operations for the next 12 months. We will be forced to raise additional funds
by issuing new debt or equity securities or otherwise. If we fail to raise
sufficient capital when needed, we will not be able to complete our business
plan. We are a developing company and our revenue has not been sufficient to
attain profitability.
14
The Company has been able to receive loans from various third parties to
continue operations. These loans are unsecured, to be repaid on demand and at a
rate of interest of 10% starting on June 1, 2010. See subsequent events for
conversion of debt into equity.
PLAN OF OPERATION
Our cash balance is $0 as of May 31, 2009. Our cash balance is insufficient to
fund our levels of operations for the next twelve months. As a result we will be
forced to raise additional funds by issuing new debt or equity securities or
otherwise. If we fail to raise sufficient capital when needed, we will not be
able to complete our business plan. We are a development stage company and have
generated minimal revenues to date.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
15
ITEM 8. FINANCIAL STATEMENTS
REPORT OF BOARD OF DIRECTORS AND MANAGEMENT
Management acknowledges responsibility for the preparation and presentation of
the unaudited interim financial statements, including responsibility for
significant accounting judgments and estimates and the choice of accounting
principles and methods that are appropriate to the Company's circumstances.
Management has established processes, which are in place to provide them
sufficient knowledge to support management representations that they have
exercised reasonable diligence that (i) the unaudited interim financial
statements do not contain any untrue statement of material fact or omit to state
a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it is made, as of the
date of and for the periods presented by the unaudited interim financial
statements and (ii) the unaudited interim financial statements fairly present in
all material respects the financial condition, results of operations and cash
flows of the Company, as of the date of and for the periods presented by the
unaudited interim financial statements.
The Board of Directors is responsible for reviewing and approving the unaudited
interim financial statements together with other financial information of the
Company and for ensuring that management fulfills its financial reporting
responsibilities. An Audit Committee assists the Board of Directors in
fulfilling this responsibility. The Audit Committee meets with management to
review the financial reporting process and the unaudited interim financial
statements together with other financial information of the Company. The Audit
Committee reports its findings to the Board of Directors for its consideration
in approving the unaudited interim financial statements together with other
financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company's affairs in
compliance with established financial standards, and applicable laws and
regulations, and for maintaining proper standards of conduct for its activities.
16
Orofino Gold Corp.
(An Development Stage Company)
Balance Sheets
(Stated in US Dollars)
May 31, May 31,
2010 2009
---------- ----------
Unaudited Audited
Assets
Current Assets
Prepaid expense $ 985 $ --
---------- ----------
Total Current Assets 985 --
Non-Current Assets
Mineral Properties -- --
Related Party Deposits -- 824
Deposits 267 267
---------- ----------
Total Non-Current Assets 267 1,091
---------- ----------
Total Assets $ 1,252 $ 1,091
========== ==========
Liabilities
Current Liabilities
Over Draft $ -- $ 3,507
Accounts Payable 139,089 14,625
Loans payable 490,334 --
Related Party Loan -- 48,289
---------- ----------
Total Current Liabilities 629,423 66,421
Total Liabilities 629,423 66,421
---------- ----------
Stockholders' Deficiency
Common Stock, $0.001 par value
75,000,00 Common Shares Authorized
60,000,000 Shares Issued 60,000 60,000
Additional Paid-in capital (49,533) (51,500)
Deficit accumulated during development period (639,474) (74,666)
Translation Adjustments 836 836
---------- ----------
Total Stockholders' Deficit (628,171) (65,330)
---------- ----------
Total Liabilities and Stockholders' Equity $ 1,252 $ 1,091
========== ==========
|
The accompanying notes are an integral part of these financial statements.
17
Orofino Gold Corp.
(An Development Stage Company)
Income Statements
(Stated in US Dollars)
Unaudited
From inception
For the year ended (April 12, 2005) to
May 31, 2010 May 31, 2009 May 31, 2010
------------ ------------ ------------
Revenue $ 812 $ 65,803 $ 116,326
------------ ------------ ------------
Expenses
Advertising and Promotion -- 763 1,812
Wages and Salary -- 64,754 111,952
Consulting fees 105,044 -- 105,044
Mineral exploration expense 406,168 -- 406,168
General and Administrative 31,441 34,173 107,857
Management fees 21,000 -- 21,000
Imputed Interest 1,967 -- 1,967
------------ ------------ ------------
Total Expenses 565,620 99,690 755,800
------------ ------------ ------------
Provision for income tax -- -- --
Net Income (Loss) $ (564,808) $ (33,887) $ (639,474)
============ ============ ============
Basic & Diluted (Loss) per Common Share $ (0.01) $ (0.001)
------------ ------------
Weighted Average Number of Common Shares 60,000,000 60,000,000
------------ ------------
|
The accompanying notes are an integral part of these financial statements.
18
OROFINO GOLD CORP.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
For the years ended May 31, 2009 and May 31, 2008
(Stated in US Dollars)
Unaudited
Common Stock Paid in Translation Retained Total
Shares Amount Capital Adjustments Deficit Equity
------ ------ ------- ----------- ------- ------
Shares issued to founders on April 12, 2005
at $0.0001 per share 60,000,000 $60,000 $(59,000) $ -- $ -- $ (59,000)
Net (Loss) for period ending May 31, 2006 -- -- -- -- (800) (800)
---------- ------- -------- ------- --------- ---------
Balance, May 31, 2006 60,000,000 $60,000 $(59,000) $ -- $ (800) $ (59,800)
Net (Loss) for period ending May 31, 2007 -- -- -- -- (200) (200)
---------- ------- -------- ------- --------- ---------
Balance, May 31, 2007 60,000,000 $60,000 $(59,000) $(1,000) $ --
Contributed Capital -- -- 7,500 -- -- 7,500
Translation Adjustments for period ending
May 31,2008 -- -- -- (111) -- (111)
Net (Loss) for period ending May 31, 2008 -- -- -- -- (39,779) (39,779)
---------- ------- -------- ------- --------- ---------
Balance, May 31, 2008 60,000,000 $60,000 $(51,500) $ (111) $ (40,779) $ (32,390)
Translation Adjustments for period ending
May 31,2009 -- -- -- 947 -- 947
Net (Loss) for the period ending May 31, 2009 -- -- -- -- (33,887) (33,887)
---------- ------- -------- ------- --------- ---------
Balance, May 31, 2009 60,000,000 $60,000 $(51,500) $ 836 $ (74,666) $ (65,330)
Translation Adjustments for period ending
May 31, 2010 -- -- -- -- -- --
Contributed Capital -- -- 1,967 -- -- 1,967
Net (Loss) for the period ending May 31, 2010 -- -- -- -- (564,808) (564,808)
---------- ------- -------- ------- --------- ---------
Balance, May 31, 2010 60,000,000 $60,000 $(49,533) $ 836 $(639,474) $(628,171)
========== ======= ======== ======= ========= =========
|
The accompanying notes are an integral part of these financial statements.
19
Orofino Gold Corp.
(An Development Stage Company)
Statements of Cash Flows
(Stated in US Dollars)
Unaudited
From inception
For the year ended (April 12, 2005) to
May 31, 2010 May 31, 2009 May 31, 2010
------------ ------------ ------------
OPERATING ACTIVITIES
Net income (loss) $ (564,808) $ (33,887) $ (639,474)
Adjustments to reconcile net income to net cash
Imputed interest on related party loan 1,967 -- 1,967
Accounts payable 124,464 6,896 139,089
Over Draft (3,507) 3,507 --
Prepaid expenses (985) (985)
Deposits -- 610 (1,091)
---------- --------- ----------
NET CASH USED IN OPERATING ACTIVITIES ((442,869) ((22,874) ((500,494)
FINANCING ACTIVITIES
Related party loan (47,465) 21,369 824
Loans 490,334 490,334
Contributed Capital -- -- 7,500
Common shares issued to founders
@ $0.0001 per share -- -- 1,000
---------- --------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 442,869 21,369 499,658
Effect of exchange rate on cash -- 947 836
Cash at beginning of period -- 558 --
---------- --------- ----------
CASH AT END OF PERIOD $ -- $ -- $ --
========== ========= ==========
Cash Paid For:
Interest $ -- $ -- $ --
========== ========= ==========
Income Tax $ -- $ -- $ --
========== ========= ==========
Non-Cash Activities
Shares issued in Lieu of Payment for Service $ -- $ -- $ --
========== ========= ==========
Stock issued for accounts payable $ -- $ -- $ --
========== ========= ==========
Stock issued for notes payable and interest $ -- $ -- $ --
========== ========= ==========
Stock issued for convertible debentures and interest $ -- $ -- $ --
========== ========= ==========
Convertible debentures issued for services $ -- $ -- $ --
========== ========= ==========
Warrants issued $ -- $ -- $ --
========== ========= ==========
Stock issued for penalty on default of convertible $ -- $ -- $ --
debentures
========== ========= ==========
Note payable issued for finance charges $ -- $ -- $ --
========== ========= ==========
Forgiveness of note payable and accrued interest $ -- $ -- $ --
========== ========= ==========
|
The accompanying notes are an integral part of these financial statements.
20
OROFINO GOLD CORP.
(A Development Stage Company)
Footnotes to the Financial Statements
From Inception (April 12, 2005 to May 31, 2010)
(Stated in US Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Orofino Gold Corp. ("Orofino" or "SNT" or the "Company") was organized under the
laws of the State of Nevada on April 12, 2005 as SNT Networks Inc. On April 22,
2008 the company changed its corporate name to SNT Cleaning Inc.
On May 8, 2009, the Company passed a resolution to forward stock split of its
common stock on a ratio of six shares for every one share of the Company. The
record date of the forward stock split was May 15, 2009 and the payment date of
the forward split was May 19, 2009. The forward split was payable as a dividend,
thereby requiring no action by shareholders, nor any amendment to the articles
of incorporation of the Company.
On December 5, 2009, the Company passed a resolution to change its name from SNT
Cleaning Inc. to Orofino Gold Corp.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a May 31 year-end.
b. Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement
exists, service has been completed, the contract price is fixed or determinable,
and collectability is reasonably assured.
c. Income Taxes
The Company prepares its tax returns on the accrual basis. The Company accounts
for income taxes under the Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109, 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 enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
21
d. Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
e. Assets
The company has no cash as of May 31, 2010.
f. Income
Income represents all of the company's revenue less all its expenses in the
period incurred. The Company has revenues of $812 for the year ending May 31,
2010 (2009 - $65,803) and has expenses of $564,796 over the same period (2009 -
$99,690). For the year ended May 31, 2010 it has incurred a net loss of $563,984
(2009 - $33,887).
g. Basic Income (Loss) Per Share
In accordance with SFAS No. 128-"Earnings Per Share", the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. At May 31, 2009, the Company has
no stock equivalents that were anti-dilutive and excluded in the earnings per
share computation.
i. Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers all highly
liquid investments purchased with maturity of three months or less to be cash
equivalents.
j. Liabilities
Liabilities are made up of current liabilities. Current liabilities as of May
31, 2010 include accounts payable of $139,089 (2009 - $14,625), Overdraft of
$NIL (2009 - $3,507), an amount due to related party of $nil (2009 - $48,289)
which is owed to a shareholder, interest free and due on demand, and loans
payable of $490,334 (2009 - $nil) at 10% per annum.
Share Capital
a) Authorized:
75,000,000 common shares with a par value of $0.001
b) Issued:
The company issued to the founders 10,000,000 common shares of stock for $1,000.
On May 20, 2009, the Company completed a forward stock split of its common stock
on a ratio of six shares for every one share of the Company. The record date of
22
the forward stock split was May 15, 2009, the payment date of the forward split
was May 19, 2009, and the ex-dividend date of the forward split was May 20,
2009. The forward split was payable as a dividend, thereby requiring no action
by shareholders, nor any amendment to the articles of incorporation of the
Company. As a result of the forward split, the post forward split number of
issued and outstanding shares was 60,000,000. As of May 31, 2009, there where
Sixty Million (60,000,000) common shares issued and outstanding at a value of
$0.001 per share
The Company has issued no authorized preferred shares.
The Company has no stock option plan, warrants or other dilutive securities.
k. Foreign currency transactions
The financial statements are presented in United States dollars; however, the
functional currency for the Company is the Canadian dollar. Thus, in accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", the current rate method is used. All foreign denominated assets
and liabilities are translated to their United States dollar equivalents using
foreign exchange rates that prevailed at the balance sheet date. Revenue and
expenses are translated at weighted average rates of exchange during the year
and stockholders' equity accounts are translated by using historical exchange
rates. Translation adjustments resulting from using different rates on different
financial statement components are reported as a component of accumulated other
comprehensive income in the stockholders' equity section of the balance sheet.
l. Advertising Costs
The Company's policy regarding advertising is to expense advertising when
incurred. The Company had incurred a total advertising expense of $34,044
(2009-$763) for the year ending May 31, 2010.
m. Loans payable
The Company has loans payable to various independent third parties on the basis
of being unsecured, payable on demand and bearing interest at the rate of 10%
per annum starting on June 1, 2010.
n. Recent Accounting Pronouncements
ASC 105
In June 2009, the FASB created the Accounting Standards Codification, which is
codified as ASC 105. ASC 105 establishes the codification as the single official
non-governmental source of authoritative accounting principles (other than
guidance issued by the SEC) and supersedes and effectively replaces previously
issued GAAP hierarchy framework. All other literature that is not part of the
codification will be considered non-authoritative. The codification is effective
for interim and annual periods ending on or after September 15, 2009. The
Company has applied the codification, as required, beginning with the 2009 Form
10-K. The adoption of the codification did not have a material impact on the
Company's financial position, results of operations or cash flows.
ASC 855
In June 2009, the FASB updated ASC 855, which established principles and
requirements for subsequent events. This guidance details the period after the
balance sheet date which the Company should evaluate events or transactions that
may occur for potential recognition or disclosure in the financial statements,
the circumstances under which the Company should recognize events or
transactions occurring after the balance sheet date in its financial statements
and the required disclosures for such events. ASC 855 is effective for interim
23
and annual periods ending after June 15, 2009. The implementation of ASC 855 did
not have a material effect on the Company's financial statements.
ASU 2009-13
In October 2009, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update 2009-13 (ASU 2009-13), which provided an update to
ASC 605. ASU 2009-13 addresses how to separate deliverables and how to measure
and allocate arrangement consideration to one or more units of accounting in
multiple-deliverable arrangements. The amendments in this update will be
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. The Company is
currently evaluating the impact that this update will have on its Financial
Statements.
o. Related Party Disclosures
The company has a related party deposit of $nil (2009 - $824) as of May 31,
2010. This was a rental damage deposit that has been sent to the landlord who
was a shareholder of the company.
The company has a related party loan of $nil (2009 - $48,289). As of May 31,
2009 the loans details are as follows:
Amount Owed as
Lender Relation of May 31, 2009 Terms
------ -------- --------------- -----
911108 Alberta Ltd. Controlled by Mr. Denman 30,512.20 Zero interest, due on demand
Rob Denman N/A 17,776.70 Zero interest, due on demand
|
p. Subsequent Events
The following subsequent events have been evaluated through September 3, 2010.
Letter of Intent
On August 15, 2010 the Company amended a letter of intent signed on April 6,
2010 ("LOI"). Pursuant to the original terms of the LOI, the terms were amended
in regards to cash payments and the payment by the issuance of common shares of
the Company. The following terms are the amendments:
1. $250,000 as an initial option payment;
2. $500,000 on or before October 31, 2010;
3. $750,000 on the first anniversary;
4. $1,000,000 on the second anniversary;
5. $1,250,000 on the third anniversary;
6. $1,250,000 on the fourth anniversary; and
7. $2,500,000 on the fifth anniversary date.
The vendor may accept common shares of the Company in lieu of the cash payment
due on or before October 31, 2010 or a portion thereof at the rate of $0.05 per
share.
24
Officers
On June 4, 2010 the Company accepted the resignation of its President, Secretary
and director, John Martin, and appointed Shi Long Ning as a Director of the
Company, effective as of equal date.
Issuance of Shares
For Services: On June 16, 2010 the Company issued 600,000 restricted shares for
services at a value of $0.13 each.
For debt: On August 18, 2010 the Company issued 3,600,000 restricted shares at
$0.01 each pursuant to an assignment of debt dated October 31, 2009. The Company
has approved the issuance of a further 1,540,972 shares at the rate of $0.01 per
share pursuant to the assignment of debt as at October 31, 2009. Also on August
18, 2010 the Company issued 6,000,000 restricted shares pursuant to the
retirement of debt as at February 17, 2010.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the normal course of business.
However, the Company has accumulated a loss to date. This raises substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from this
uncertainty.
As shown in the accompanying financial statements, the Company has incurred a
net loss of $639,474 for the period from April 12, 2005 (inception) to May 31,
2010. The future of the Company is dependent upon its ability to obtain
financing and upon future profitable operations from the development of
acquisitions. Management has plans to seek additional capital through a private
placement and public offering of its common stock. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of May 31, 2010 management assessed the effectiveness of our internal control
over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control--Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO") and SEC guidance on conducting such assessments. Based on that
evaluation, they concluded that, during the period covered by this report, such
internal controls and procedures were not effective to detect the inappropriate
application of US GAAP rules as more fully described below. This was due to
deficiencies that existed in the design or operation of our internal controls
over financial reporting that adversely affected our internal controls and that
may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
26
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of May 31, 2010.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
This annual report does not include an attestation report of the Corporation's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Corporation's registered public accounting firm pursuant to temporary rules of
the SEC that permit the Corporation to provide only the management's report in
this annual report.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by May 31, 2011. Additionally, we plan to test our updated controls
and remediate our deficiencies by May 31, 2011.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
The names, ages and titles of our executive officers and director are as
follows:
Name and Address of Executive
Officer and/or Director Age Position
----------------------- --- --------
Shi Long Ning 34 President, Secretary, and Director
|
27
Shi Long Ning is a resident of Dalian, China and has over 12 years of experience
in business, information management and systems.
TERM OF OFFICE
Our director is appointed to hold office until the next annual meeting of our
stockholders or until his successor is elected and qualified, or until he
resigns or is removed in accordance with the provisions of the State of Nevada
Statutes. Our officer is appointed by our Board of Directors and holds office
until removed by the Board.
SIGNIFICANT EMPLOYEES
We have no significant executive employees other than our officer and directors
who devotes up to 20 hours per week to company matters. We also have part-time
employees that we use as required to operate our business.
Our officers and directors have not been the subject of any order, judgment, or
decree of any court of competent jurisdiction, or any regulatory agency
permanently or temporarily enjoining, barring, suspending or otherwise limited
him from acting as an investment advisor, underwriter, broker or dealer in the
securities industry, or as an affiliated person, director or employee of an
investment company, bank, savings and loan association, or insurance company or
from engaging in or continuing any conduct or practice in connection with any
such activity or in connection with the purchase or sale of any securities.
Our officers and directors have not been convicted in any criminal proceeding
(excluding traffic violations) nor is he subject of any currently pending
criminal proceeding.
We conduct our business through agreements with consultants and arms-length
third parties. We pay our consulting geologist the usual and customary rates
received by geologists performing similar consulting services.
CODE OF ETHICS
Our board of directors adopted our code of ethical conduct that applies to all
of our employees and directors, including our principal executive officer,
principal financial officer, principal accounting officer or controller, and
persons performing similar functions.
We believe the adoption of our Code of Ethical Conduct is consistent with the
requirements of the Sarbanes-Oxley Act of 2002.
Our Code of Ethical Conduct is designed to deter wrongdoing and to promote:
* Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
* Full, fair, accurate, timely and understandable disclosure in reports
and documents that we file or submit to the Securities & Exchange
Commission and in other public communications made by us;
* Compliance with applicable governmental laws, rules and regulations;
* The prompt internal reporting to an appropriate person or persons
identified in the code of violations of our Code of Ethical Conduct;
and
* Accountability for adherence to the Code.
28
ITEM 11. EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the past three years ending March 31, 2010:
Annual Compensation Long Term Compensation
-------------------------------- ----------------------------------
Restricted
Other Annual Stock Options/* LTIP All Other
Name Title Year Salary($) Bonus Compensation Awarded SARs(#) payouts($) Compensation
---- ----- ---- --------- ----- ------------ ------- ------- ---------- ------------
Robert Denman Past 2007 $ 0 $0 $0 $0 $0 $0 $0
President, 2008 $ 0 $0 $0 $0 $0 $0 $0
Secretary 2009 $ 0 $0 $0 $0 $0 $0 $0
and
Director
John Martin President, 2009 $ 0 $0 $0 $0 $0 $0 $0
Secretary 2010 $21,000 $0 $0 $0 $0 $0 $0
and
Director
|
There are no current employment agreements between the company and its
officer/director.
There are no annuity, pension or retirement benefits proposed to be paid to the
officer or director or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of August 31, 2010 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) our director, and or (iii) our officer.
Unless otherwise indicated, the stockholder listed possesses sole voting and
investment power with respect to the shares shown.
Shares of
Title of Class Name of Beneficial Owner Common Stock Percent of Class
-------------- ------------------------ ------------ ----------------
Common Robert Denman 30,000,000 50%
9012 - 100 Street
Westlock, Alberta
T7P 2L4
|
29
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of our directors, or officers, any proposed nominee for election as a
director, any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to all of our outstanding
shares, any promoter, or any relative or spouse of any of the foregoing persons
has any material interest, direct or indirect, in any transaction since our
incorporation or in any presently proposed transaction which, in either case,
has or will materially affect us other then the transactions described below.
The company has a related party deposit of $nil as of May 31, 2010 (2009-$824).
This was a rental damage deposit that had been sent to the Rob Denman.
The company has a related party loan of $nil at May 31, 2010 (2009-$48,289) with
Rob Denman. The loan had a zero interest loan and was due on demand.
Our management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. In the event that a
conflict of interest arises at a meeting of our directors, a director who has
such a conflict will disclose his interest in a proposed transaction and will
abstain from voting for or against the approval of such transaction.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
For the year ended May 31, 2010, the total fees charged to the company for audit
services, audit-related services and tax services including quarterly reviews,
were $4,500.
For the year ended May 31, 2009, the total fees charged to the company for audit
services, audit-related services and tax services including quarterly reviews,
were $7,500.
For the year ended May 31, 2008, there were $6,750 in fees charged to the
company for audit services, audit-related services and tax services.
30
PART IV
ITEM 15. EXHIBITS
Exhibit
Number Description
------ -----------
31.1 Sec. 302 Certification of Chief Executive Officer
31.2 Sec. 302 Certification of Chief Financial Officer
32.1 Sec. 906 Certification of Chief Executive Officer
32.2 Sec. 906 Certification of Chief Financial Officer
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SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) 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.
September 3, 2010 Orofino Gold Corp.
By: /s/ Shi Long Ning
----------------------------------------------------
Shi Long Ning, President and Chief Executive Officer
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In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
September 3, 2010 Orofino Gold Corp.
By: /s/ Shi Long Ning
----------------------------------------------------
Shi Long Ning, President, Treasurer and Chief
Financial Officer (Principal Executive Officer and
Principal Accounting Officer)
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31
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