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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the fiscal year ended November 30, 2006
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Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transaction period from _________ to ___________
Commission File number
BROOKMOUNT EXPLORATIONS, INC.
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(Exact name of Company as specified in charter)
Nevada 98-0201259
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(State or other jurisdiction of incorporation (IRSiEmployer Identification No.)
or organization)
999 Canada Place, Suite 404
Vancouver BC, Canada V6C 2X8
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(Address of principal executive offices) (Postal Zip Code)
Issuer's telephone number, including area code: (604) 676-5244
Securities registered pursuant to section 12(b) of the Act:
Title of each shar registered Name of each exchange on which
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for a 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 [ ]
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of the 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 shell company
(as Defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State issuer's revenues for its most recent fiscal year: Nil
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) $4,159,760.32 as at February 26,
2007
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 25,998,502 shares of common
stock as at February 26, 2007
TABLE OF CONTENTS
Page
PART 1.......................................................................3
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ITEM 1. DESCRIPTION OF BUSINESS..........................................3
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ITEM 2. DESCRIPTION OF PROPERTY..........................................11
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ITEM 3. LEGAL PROCEEDINGS................................................14
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS............15
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PART II......................................................................16
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........16
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........17
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ITEM 7 FINANCIAL STATEMENTS..............................................18
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ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING
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FINANCIAL DISCLOSURE.............................................19
PART III..................................................................... 20
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ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....20
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ITEM 10. EXECUTIVE COMPENSATION..........................................21
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ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..21
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................22
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PART IV..................................................................... 23
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ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES..........................23
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................................................................................
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
History and Organization
Brookmount Explorations, Inc. (the "Company"), a Nevada Corporation,
was incorporated on December 9, 1999. Since inception, the Company has not been
involved in any bankruptcy, receivership or similar proceedings. It has not had
any material reclassification, merger, consolidation, purchase or sale of a
significant amount of assets not in the ordinary course of business. The Company
has no subsidiaries and no affiliated companies. The Company's shares are quoted
on the NASD over the counter bulletin board (OTCBB) and currently trading under
the symbol "BMXI".
Subsequent to November 30, 2005, the Company's shares were listed on
the Berlin Stock exchange under the symbol "B6P". The Company also filed an
application with the Frankfurt Stock Exchange.
The Company's executive offices are located at World Trade Centre - 999
Canada Place, Suite 404, Vancouver, B.C., Canada, V6C 3E2 (Telephone:
604-676-5244).
The Company's Articles of Incorporation currently provide that the
Company is authorized to issue 200,000,000 shares of common stock, par value
$0.001 per share. As at February 21, 2007, there were 25,998, 502 shares
outstanding.
The Company commenced operations as an exploration stage company during
the fiscal year ended November 30, 2005.
The Company owns an interest in five mineral claims located in Quebec
which are known as the Brookmount claims. Subsequent to November 30, 2005, the
Company allowed its claims to expire in Quebec to better concentrate on its
Mercedes 100 and Rock Creek properties. During the year ended November 30,2005
the Company completed a mineral property purchase agreement, as amended, with
Mr. Peter Flueck dated January 24, 2005, and acquired a 100% interest in the
Mercedes 100 mineral property located in Comas District, Concepcion Department,
Junin Province, Peru (the "Mercedes 100 Property"). Mr. Flueck acts as the
Company's president and a director. Our principal exploration property is the
Mercedes 100 Property.
In addition, during the year ended November 30, 2005, the Company
acquired a right to purchase a 100% interest in the Mooseland property located
in Halifax County Nova Scotia pursuant to a binding letter of agreement dated
June 14, 2005. In September 2005, the Company had withdrawn its participation in
the Mooseland Property project and forfeited the right to purchase a 100%
interest in the property.
On May 25, 2006 the Company entered into an Option Agreement (the
"Agreement") to acquire an option to purchase 100% of the issued share capital
of 722161 B.C. Ltd ("BC Ltd"), a private corporation which is the owner of the
interest in the Rock Creek Property. The property is located approximately 10
kilometers southeast of Rock Creek, B.C. in the Greenwood Mining Division.
Brookmount Claims
-----------------
The Company presently had the mineral rights to five mineral claims called the
Brookmount claims located in Chazel Township, Abitibi West County, Quebec.
3
The Company retained J.G. Burns & Associates of Timmins, Ontario to
write a geological report on these claims. The claims were in good standing
until November 14, 2006. The Company did not renew the claims and consequently
the claims lapsed.
Mercedes 100 Property
---------------------
The Mercedes 100 property consists of six mineral claims. We are the beneficial
owner of a 100% interest in the claims. There are no other underlying agreements
or interests in the property.
Specifics of the six mineral claims are as follows:
Claim Area
Claim Name Claim Number (Hectares)
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Mercedes 100 C-08020145X011 450.00
Celeste C-010151600 298.84
Celeste No. 2 C-010151500 218.58
Celeste No. 4 C-010151700 200.00
Nuevo Herraje Cuatro C-010154100 996.96
Nueva Charo C-010051101 446.93
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Subsequent to November 30, 2005, Brookmount filed an application to
acquire an additional 500 hectares of land at the Mercedes 100 property.
This application was granted on July 29, 2006. Acquisition and
Maintenance of Mineral Rights in Peru
The General Mining Law of Peru defines and regulates all mining
activity, from sampling and prospecting to commercialization, exploitation and
processing. Mining concessions are granted in defined areas generally ranging
from 100 to 1,000 hectares in size. Mining titles are irrevocable and perpetual,
as long as the titleholder maintains payment of government fees. No royalties or
other production-based monetary obligations are imposed on holders of mining
concessions. Instead, a holder of mineral concessions must pay an annual
maintenance fee of $3.00 per hectare for each concession actually acquired or
for a pending application by June 30 of each year. The concession holder must
sustain a minimum level of annual commercial production of greater than $100 per
hectare in gross sales within eight years of the granting of the concession or,
if the concession is not yet in production, the annual rental increases to $4.00
per hectare for the ninth through fourteenth years of the granting of the
concession and to $10.00 per hectare thereafter. The concession will terminate
if the annual fee is not paid for three years in total or for two consecutive
years. The term of the concession is indefinite as long as the property is
maintained by payment of rental fees.
The Peruvian Constitution and the Civil Code protect a mineral title
holder by granting it the same rights as a private property holder. The holder's
rights are distinct and independent from the ownership of the land on which it
is located, even when both belong to the same person. Mining rights are
defensible against third parties, transferable, chargeable and may be the
subject of any contract or transaction.
Description, Location and Access
--------------------------------
The Mercedes 100 property is accessed from Lima by an excellent paved mountain
highway to Concepcion, just 10 kilometers short of the provincial capital of
Huancayo, then by a paved road to Santa Roda de Ocopa. A good all-weather gravel
road connects Ocopa with Satipo, a village in the Amazonas river basin. The
Mercedes Mine camp is 36 kilometers from Santa Rosa.
4
Although the property is within 12 degrees south of the equator, it
lies between 4,300 and 4,500 meters above sea level in an area that is treeless
and cold. There are two main seasons in the region of the property: a dry cool
winter with sunny days and cold nights (to -4(0) Celsius) lasting from May to
October, and a wet, cool summer that lasts from November to April and is
characterized for its intense rains, snow and hail storms and average
temperatures of 8(0) Celsius.
A 33 kilovolt power line follows the main gravel road past the Mercedes
100 property. Pomamanta, the nearest village to the property, about five
kilometers to the east, is electrified on a limited basis. The line is 4.5
kilometres from the property site. Water for mining and drilling is available
from streams and seeps in the hills above the property.
Nearby towns such as Concepcion and Huancayo are modern and offer most
necessities. There is a narrow gauge railroad from Lima to Huancayo. This
connects the mining and smelting center of La Oroya, 130 kilometers to the west.
On the property site, there is a large brick building that could be
refurnished to serve as a camp for 20 to 30 people.
Mineralization and Exploration History
--------------------------------------
In the 1990's, Leader Mining Inc. entered into an option agreement with Mr.
Peter Flueck for a 50% working interest in the property and in 1996,
commissioned MPH Geological Consulting to assess the property's potential.
Although the report contained a range of values of zinc, lead, gold and silver
mineralization found on the property, as well as calculations of proven,
potential, probable and possible reserves, we do not have sufficient information
that would be necessary to determine if these figures are accurate or were
calculated in accordance with acceptable mining standards.
Prior to our acquisition of the Mercedes 100 property, approximately
$3,000,000 has been spent on the property. Most of these funds were spent on
road building, re-opening underground workings on the property, topographical
surveys, metallurgical tests, several exploitation campaigns and numerous
sampling programs.
Geological Report: Mercedes 100 property
----------------------------------------
We obtained a geological report on the Mercedes 100 property that was prepared
by Guillermo Salazar, a professional geologist, of Calgary, Alberta. We
commissioned the report in March 2004. The geological report summarizes the
results of previous exploration on the Mercedes 100 property and makes a
recommendation for further exploration work.
In his report, Mr. Salazar recommends further exploration of the
Mercedes 100 property that would include the following:
1. Survey of the property's several know showings, adits
and trenches. It is recommended that this be done by
confirming that the property boundaries are properly located,
that the portals, adits and trenches are re-located with
respect to the property boundaries and to other cultural and
topographic features such as access roads, camps, mine dumps
and main rivers.
2. There is about 200 tonnes of run-of-mine mineral in 50
kilogram sacks stacked along the road near the property. The
sacks are in variable states of deterioration. They are,
however, readily available for shipping if a nearby mill were
to take the material for processing. The cost to us would
include the cost of check assaying, re-sacking and
transportation to the mill. Preliminary sampling of this rock
indicates an average of 8.73 ounces per ton silver and 1.34%
zinc. Mr. Salazar recommends that this be investigated.
5
3. A drilling program consisting of sixteen drill holes
and totaling 1,810 meters designed to test prospective areas
of the claims is recommended.
4. The geological interpretation of the claims needs to be confirmed.
This requires the following:
o a satellite image interpretation map. The primary
objective of this would be to define the trace
continuity of the faults and veins recognized on the
property
o a structural airphoto and geological map. The
airphotos used for this map could also be used to
produce a ground controlled topographic map without
the errors in the government data packages. The required
detail of this recommendation depends on the results
o from the survey described in paragraph one above the
results from these studies should be followed up with
careful prospecting of the targets thus defined.
Mr. Salazar proposes the following budget for exploration:
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Survey the property's showings, adits and trenches: $7,500
Truck rental (30 days at $100 per day): $3,000
Check assaying of 220 tonnes, re-sacking of material and $10,000
identification of potential purchasers:
Application for drilling permits: $3,000
Drilling of 1,800 meters in 16 holes: $271,500
Permit closure reporting: $3,000
Satellite interpretation of alteration and lineaments: $10,000
Testing of sacked mineralized rock (30 samples at $20 each): $600
Drill core testing (300 samples at $20 each): $6,000
Gridding work: $75,000
Report writing: $15,000
Office and administration: $7,500
Miscellaneous: $40,000
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Total: $449,100
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Compliance with Government Regulation
-------------------------------------
The General Mining Law of Peru is the primary body of law with regards to
environmental regulations. It is administered by the Ministry of Energy and
Mines (the "MEM"). The MEM can require a mining company to prepare an
environmental evaluation, an environmental impact assessment, a program for
environmental management and adjustment and a closure plan. Mining companies are
also subject to annual environmental audits.
A mining company that has completed its permitted exploration program
must submit an impact study when applying for a new concession, to increase the
size of its existing processing operations by more than 50% or to execute any
6
other mining project. A company must also set forth its plan for compliance with
the environmental laws and regulations, including its planned mining works,
investments, monitoring systems, waste management control and site restoration.
The plan is considered approved if the MEM does not respond after 60 days of
filing. If the MEM or an "interested party" can show just cause, the plan may be
modified during first year.
A mining company must also submit a closure plan for each component of
its operations. The closure plan must outline the measures that will be taken to
protect the environment over the short, medium and long term from solids,
liquids and gasses generated by the mining works. The General Mining Law of Peru
has in place a system of sanctions or financial penalties that can be levied
against a mining company not in compliance with the environmental regulations.
Employees
---------
The Company does not have any full time employees other than its two directors.
Once a major exploration program commences it is anticipated that the officers
will devote more time to the activities of the Company to meet the increased
needs. In addition, the Company expects that will need to hire additional
employees or consultants to undertake any specialized work.
Available Information
---------------------
The Company's shares are listed on the OTCBB, Presently, the Company files
reports with the United States Securities and Exchange Commission (the "SEC") on
Forms 10-KSB and 10-QSB.
The public may read and copy any material the Company files with the
SEC at the SEC's Public Reference Room at 100 F Street NE, N.W., Washington,
D.C., 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The Company is files its
periodic reports electronically and therefore the public can review the
Company's filing on the SEC Internet site that contains reports, proxy, and
information statements, and other information regarding the Company. This
information can be obtained by accessing the SEC website address at
http://www.sec.gov.
The Company's internet address is www.brookmount.com
Research and Development Expenditures
-------------------------------------
We did not incur any research and development expenditures during the fiscal
year ended November 30, 2006.
Subsidiaries
------------
The Company does not have any subsidiaries.
Patents and Trademarks
----------------------
We do not own, either legally or beneficially, any patents or trademarks.
ITEM 1.A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below and the other information in
this prospectus before investing in our common stock. If any of the following
risks occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
7
OUR MERCEDES 100 PROPERTY CONTAINS THE FOLLOWING RESERVES AND RESOURCES.
Proven - 21,500 tons and 1 ounce gold equivalent Potential &
Prospective - 480,000 tons at ounce gold equivalent Possible -
1,950,000 tons at ounce gold equivalent
Our sole mineral property assets are the Mercedes property in Peru and
the Rock Creek Property in British Columbia. As both of these properties are in
the exploration stage, they do not generate any cash flow. Accordingly, we have
no means of producing any income. We anticipate incurring losses for the
foreseeable future.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete planned
exploration on our mineral properties, and therefore we will need to obtain
additional financing in order to complete our business plan. As of November 30,
2006, we had cash in the amount of $18,091. We currently do not have any
operations and we have no income.
Our business plan calls for significant expenses in connection with the
exploration of the Brookmount claims and the Mercedes property. We do not have
sufficient funds to complete recommended exploration on the properties and
ongoing administrative expenses.
We will also require additional financing if the costs of the
exploration of our properties are greater than anticipated. We will also require
additional financing to sustain our business operations if we are not successful
in earning revenues once exploration is complete. We do not currently have any
arrangements for financing and we can provide no assurance to investors that we
will be able to find such financing if required. Obtaining additional financing
would be subject to a number of factors, including the market prices for metals
such as gold, investor acceptance of our properties and general investor
sentiment. These factors may make the timing, amount, terms or conditions of
additional financing unavailable to us.
The most likely source of future funds presently available to us is
through the sale of equity capital. Any sale of share capital will result in
dilution to existing shareholders. The only other anticipated alternative for
the financing of further exploration would be the offering by us of an interest
in our properties to be earned by another party or parties carrying out further
exploration thereof, which is not presently contemplated.
BECAUSE WE HAVE ONLY RECENTLY COMMENCED BUSINESS OPERATIONS, WE FACE A
HIGH RISK OF BUSINESS FAILURE.
We have not yet commenced exploration on the Mercedes 100 property. [Is
this still accurate? What about Brookmount?] Accordingly, we have no way to
evaluate the likelihood that our business will be successful. To date, we have
been involved primarily in organizational activities and the acquisition of
mineral properties. We have not earned any revenues as of the date of this
report. Potential investors should be aware of the difficulties normally
encountered by new 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.
8
Prior to completion of our exploration stage, we anticipate that we
will incur increased operating expenses without realizing any revenues. We
therefore expect to incur significant losses in the foreseeable future. We
recognize that if we are unable to generate significant revenues from
development of the Merecedes 100 property and the production of minerals from
the 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 it is doubtful 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 OF THE SPECULATIVE NATURE OF EXPLORATION OF MINERAL PROPERTIES,
THERE IS A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. We
can provide investors with no assurance that the mineral claims that we have an
interest in contain commercially exploitable reserves of valuable metals.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. The expenditures to be made by us in the exploration of the
optioned mineral properties may not result in the discovery of commercial
quantities of minerals. 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 MANAGEMENT HAS NO TECHNICAL EXPERIENCE IN MINERAL EXPLORATION,
OUR BUSINESS HAS A HIGHER RISK OF FAILURE.
None of our directors has any professional training or technical
credentials in the exploration, development and operation of mines. As a result,
we may not be able to recognize and take advantage of potential acquisition and
exploration opportunities in the sector without the aid of qualified geological
consultants. As well, with no direct training or experience, our management may
not be fully aware of the specific requirements related to working in this
industry. Their decisions and choices may not be well thought out and our
operations and ultimate financial success may suffer irreparable harm as a
result.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EPLORATION, THERE
IS A RISK THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
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.
IF WE BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION OR OTHER LEGAL
UNCERTAINTIES, OUR BUSINESS WILL BE NEGATIVELY AFFECTED.
There are several governmental regulations that materially restrict
mineral property exploration and development. Under Peruvian mining law, to
engage in certain types of exploration will require work permits. While these
current laws will not affect our current exploration plans, when we proceed with
drilling operations on the Mercedes 100 property, we will incur modest
regulatory compliance costs.
BECAUSE OUR DIRECTORS AND OFFICERS OWN 43.66% OF OUR OUTSTANDING COMMON
STOCK, THEY COULD MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE
DISADVANTAGEOUS TO OTHER MINORITY SHAREHOLDERS.
9
As of the date of this filing, our directors own approximately 43.66%
of the outstanding shares of our common stock. Accordingly, they will have a
significant influence in determining the outcome of all corporate transactions
or other matters, including mergers, consolidations, and the sale of all or
substantially all of our assets. They will also have the power to prevent or
cause a change in control. The interests of our directors may differ from the
interests of the other stockholders and thus result in corporate decisions that
are disadvantageous to other shareholders.
WE MAY NOT BE ABLE TO OPERATE AS A GOING CONCERN AND OUR BUSINESS MAY
FAIL.
The Independent Auditor's Report to our audited financial statements
for the period ended November 30, 2006, indicates that there are a number of
factors that raise substantial doubt about our ability to continue as a going
concern. Such factors identified in the report are that we have no established
source of revenue and that we are dependent on our ability to raise capital from
shareholders or other sources to sustain operations.
OUR STOCK PRICE IS SUBJECT TO WIDE FLUCTUATIONS THAT MAY CAUSE
STOCKHOLDERS TO LOSE THEIR INVESTMENTS.
If a market for our common stock develops, we anticipate that the
market price of our common stock will be subject to wide fluctuations in
response to several factors, including:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trend in the mineral exploration industry.
Since our common stock is traded on the OTC Bulletin Board,
our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price of our common stock.
Forward-Looking Statements
--------------------------
We have included in this Form 10KSB statements which are intended as
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. These include statements that are not simply a statement of historical
fact but describe what we "believe," "anticipate," or "expect" will occur. We
caution you not to place undue reliance on the forward-looking statements made
in this report. Although we believe these statements are reasonable, there are
many factors, which may affect our expectation of our operations. These factors
include, among other things, the following:
o general economic conditions
o the market price of, and demand for our product
o our ability to service future indebtedness
o our ability to raise additional equity capital, obtain debt
financing, or generate sufficient revenues to fund our
operating and development plan
10
o our success in completing development and exploration
activities
o expansion and other development trends of the industry
o acquisitions and other business opportunities that may be
presented to and pursued by us
o changes in laws and regulations
ITEM 2. DESCRIPTION OF PROPERTY
MERCEDES 100 PROPERTY
By an agreement dated July 3, 2003, and amended on January 24, 2005,
the Company has also entered into an agreement with its president, Peter Flueck,
whereby the Company has agreed to purchase a 100% interest in six mineral
concessions comprising a total of 2,611 hectares located in Ahuigrande Parish,
Comas District, Concepcion Province of the Department of Junin, Peru. In order
to acquire a 100% interest in the Mercedes 100 property, the Company must pay
$22,500 (paid) to Mr. Flueck and issue a total of 5,000,000 shares (issued) of
restricted common stock in our capital as follows:
o 2,900,000 shares to the vendor, Mr. Flueck; and
o 1,050,000 shares to each of two other individuals who were
directors of the Company.
Title to the Mercedes 100 property
----------------------------------
The Mercedes 100 property consists of six mineral claims. We are the beneficial
owner of a 100% interest in the claims. There are no other underlying agreements
or interests in the property.
Specifics of the six mineral claims are as follows:
Claim Name Claim Area (Hectares)
Claim Number
-------------------------------------------------------------------------------
Mercedes 100 C-08020145X011 450.00
Celeste C-010151600 298.84
Celeste No. 2 C-010151500 218.58
Celeste No. 4 C-010151700 200.00
Nuevo Herraje Cuatro C-010154100 996.96
Nueva Charo C-010051101 446.93
-------------------------------------------------------------------------------
Acquisition and Maintenance of Mineral Rights in Peru
-----------------------------------------------------
The General Mining Law of Peru defines and regulates all mining activity, from
sampling and prospecting to commercialization, exploitation and processing.
Mining concessions are granted in defined areas generally ranging from 100 to
1,000 hectares in size. Mining titles are irrevocable and perpetual, as long as
the titleholder maintains payment of government fees. No royalties or other
production-based monetary obligations are imposed on holders of mining
concessions. Instead, a holder of mineral concessions must pay an annual
maintenance fee of $3.00 per hectare for each concession actually acquired or
for a pending application by June 30 of each year. The concession holder must
sustain a minimum level of annual commercial production of greater than $100 per
hectare in gross sales within eight years of the granting of the concession or,
if the concession is not yet in production, the annual rental increases to $4.00
11
per hectare for the ninth through fourteenth years of the granting of the
concession and to $10.00 per hectare thereafter. The concession will terminate
if the annual fee is not paid for three years in total or for two consecutive
years. The term of the concession is indefinite as long as the property is
maintained by payment of rental fees.
The Peruvian Constitution and the Civil Code protect a mineral title
holder with the same rights as a private property holder. The holder's rights
are distinct and independent from the ownership of the land on which it is
located, even when both belong to the same person. Mining rights are defensible
against third parties, transferable, chargeable and may be the subject of any
contract or transaction.
Description, Location and Access
--------------------------------
The Mercedes 100 property is accessed from Lima by an excellent paved mountain
highway to Concepcion, just 10 kilometers short of the provincial capital of
Huancayo, then by a paved road to Santa Roda de Ocopa. A good all-weather gravel
road connects Ocopa with Satipo, a village in the Amazonas river basin. The
Mercedes Mine camp is 36 kilometers from Santa Rosa.
Although the property is within 12 degrees south of the equator, it
lies between 4,300 and 4,500 meters above sea level in an area that is treeless
and cold. There are two main seasons in the region of the property: a dry cool
winter with sunny days and cold nights (to -4(0) Celsius) lasting from May to
October, and a wet, cool summer that lasts from November to April and
is characterized for its intense rains, snow and hail storms and average
temperatures of 8(0) Celsius.
A 33 kilovolt power line follows the main gravel road past the Mercedes
100 property.
Pomamanta, the nearest village to the property, about five kilometers
to the east, is electrified on a limited basis. The line is 4.5 kilometres from
the property site. Water for mining and drilling is available from streams and
seeps in the hills above the property.
Nearby towns such as Concepcion and Huancayo are modern and offer most
necessities. There is a narrow gauge railroad from Lima to Huancayo. This
connects the mining and smelting center of La Oroya, 130 kilometers to the west.
On the property site, there is a large brick building that could be
refurnished to serve as a camp for 20 to 30 people.
Mineralization and Exploration History
--------------------------------------
In the 1990's, Leader Mining Inc. entered into an option agreement with Mr.
Peter Flueck for a 50% working interest in the property and commissioned MPH
Geological Consulting to assess the property's potential in 1996. Although the
report contained a range of values of zinc, lead, gold and silver mineralization
found on the property, as well as calculations of proven, potential, probable
and possible reserves, we do not have sufficient information that would be
necessary to determine if these figures are accurate or were calculated in
accordance with acceptable mining standards.
Prior to our acquisition of the Mercedes 100 property, approximately
$3,000,000 has been spent on the property. Most of these funds were spent on
road building, re-opening underground workings on the property, topographical
surveys, metallurgical tests, several exploitation campaigns and numerous
sampling programs.
12
Geological Report: Mercedes 100 property
----------------------------------------
We have obtained a geological report on the Mercedes 100 property that was
prepared by Guillermo Salazar, a professional geologist, of Calgary, Alberta. We
commissioned the report in March 2004. The geological report summarizes the
results of previous exploration on the Mercedes 100 property and makes a
recommendation for further exploration work.
In his report, Mr. Salazar recommends further exploration of the
Mercedes 100 property that would include the following:
1. Survey of the property's several know showings, adits
and trenches. It is recommended that be done by confirming
that the property boundaries are properly located, that the
portals, adits and trenches are re-located with respect to the
property boundaries and to other cultural and topographic
features such as access roads, camps, mine dumps and main
rivers.
2. There is about 200 tonnes of run-of-mine mineral in 50
kilogram sacks stacked along the road near the property. The
sacks are in variable states of deterioration. They are,
however, readily available for shipping if a nearby mill were
to take the material for processing. The cost to us would
include the cost of check assaying, re-sacking and
transportation to the mill. Preliminary sampling of this rock
indicates an average of 8.73 ounces per ton silver and 1.34%
zinc. Mr. Salazar recommends that this be investigated.
3. A drilling program consisting of sixteen drill holes
and totaling 1,810 meters designed to test prospective areas
of the claims is recommended.
4. The geological interpretation of the claims needs to be
confirmed. This requires the following:
o a satellite image interpretation map. The primary
objective of this would be to define the trace
continuity of the faults and veins recognized on the
property
o a structural airphoto and geological map.
The airphotos used for this map could also be used to
produce a ground controlled topographic map without
the errors in the government data packages. The
required detail of this recommendation depends on the
results from the survey described in paragraph one
above.
o the results from these studies should be
followed up with careful prospecting of the targets
thus defined.
13
Mr. Salazar proposes the following budget for exploration:
Survey the property's showings, adits and trenches: $7,500
Truck rental (30 days at $100 per day): $3,000
Check assaying of 220 tonnes, re-sacking of material and $10,000
identification of potential purchasers:
Application for drilling permits: $3,000
Drilling of 1,800 meters in 16 holes: $271,500
Permit closure reporting: $3,000
Satellite interpretation of alteration and lineaments: $10,000
Testing of sacked mineralized rock (30 samples at $20 each): $600
Drill core testing (300 samples at $20 each): $6,000
Gridding work: $75,000
Report writing: $15,000
Office and administration: $7,500
Miscellaneous: $40,000
-------------------------------------------------------------------------------
Total: $449,100
-------------------------------------------------------------------------------
Compliance with Government Regulation
-------------------------------------
The General Mining Law of Peru is the primary body of law with regards to
environmental regulations. It is administered by the Ministry of Energy and
Mines (the "MEM"). The MEM can require a mining company to prepare an
environmental evaluation, an environmental impact assessment, a program for
environmental management and adjustment and a closure plan. Mining companies are
also subject to annual environmental audits.
A mining company that has completed its permitted exploration program
must submit an impact study when applying for a new concession, to increase the
size of its existing processing operations by more than 50% or to execute any
other mining project. A company must also set forth its plan for compliance with
the environmental laws and regulations, including its planned mining works,
investments, monitoring systems, waste management control and site restoration.
The plan is considered approved if the MEM does not respond after 60 days of
filing. If the MEM or an "interested party" can show just cause, the plan may be
modified during first year.
A mining company must also submit a closure plan for each component of
its operations. The closure plan must outline the measures that will be taken to
protect the environment over the short, medium and long term from solids,
liquids and gasses generated by the mining works. The General Mining Law of Peru
has in place a system of sanctions or financial penalties that can be levied
against a mining company not in compliance with the environmental regulations.
14
ITEM 3. LEGAL PROCEEDINGS
The Company is currently involved in two suits, both of which are
currently being heard in the United States District Court, Central District of
California:
i).......David Dadon v. Brookmount Explorations, Inc., Peter Flueck and
Zaf Sungur- This case involves a former officer and director of the Company who
filed suit claiming Breach of Contract after he was dismissed by the Company.
This suit was voluntarily dismissed but the Company has written to the
plaintiff's counsel stating its intention to file a Rule 11 Motion seeking
sanctions and costs against both the plaintiff and counsel.
ii.).....Brian Glicker v. Brookmount Explorations, Inc. This suit was
filed by the plaintiff seeking to compel the Company to issue an opinion letter
allowing him to sell shares that the Company contends were fraudulently procured
by one of the Company's former officers. The Company has submitted a Motion to
Dismiss this suit on jurisdictional grounds and the court has tentatively
granted such motion but permitted the plaintiff to submit additional
declarations to support his claim. The Company has filed an opposition to such
ruling and is awaiting the outcome thereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company
during the final quarter of the fiscal year ended November 30, 2006.
15
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
------------------
As of the date of this report our shares of common stock are trading on the
National Association of Securities Dealers' OTC Bulletin Board (OTCBB) under the
symbol "BMXI" and on the Berlin Stock Exchange under the symbol "B6P".
As of February 26, 2007, we have 221 shareholders of record as at the
date of this annual report.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"BMXI". Our shares of common stock began trading on December 12, 2004. These
quotations reflect inter-dealer prices, without mark-up, mark-down or
commission, and may not represent actual transactions.[info needs to be
obtained]
Bid Prices
High Low
-------------------------------------------------------------------------------
2006 Fiscal Year
First Quarter $1.08 $.18
Second Quarter $.19 $.05
Third Quarter $.15 $.065
Fourth Quarter $.15 $.13
2005 Fiscal Year
First Quarter $.61 $.56
Second Quarter $.74 $.52
Third Quarter $.48 $.15
Fourth Quarter $.48 $.10
-------------------------------------------------------------------------------
Dividends
---------
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the
usual course of business; or
2. our total assets would be less than the sum of our
total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any
dividends in the foreseeable future.
16
Equity Compensation Plans
-------------------------
The Company does not have any equity compensation plans. ITEM 6. MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Our plan of operations for the twelve months following the date of this
annual report is to complete initial exploration program on the Mercedes 100
property. We anticipate that this program will cost approximately $450,000. In
addition, we anticipate spending $30,000 on professional fees, $240,000 on
management fees, $60,000 on travel costs, $30,000 on promotional expenses and
$40,000 on other administrative expenses.
Total expenditures over the next 12 months are therefore expected to be
$850,000. In January 2006 we completed a $400,000 private placement of the
Company's restricted common stock to finance our exploration program, however,
we will not be able to proceed with either exploration program, or meet our
administrative expense requirements, without additional financing.
We currently do not have a specific plan of how we will obtain such
funding; however, we anticipate that additional funding will be in the form of
equity financing from the sale of our common stock. We may also seek to obtain
short-term loans from our directors, although no such arrangement has been made.
At this time, we cannot provide investors with any assurance that we will be
able to raise sufficient funding from the sale of our common stock or through a
loan from our directors to meet our obligations over the next twelve months. We
do not have any arrangements in place for any future equity financing.
Results Of Operations For Period Ending November 30, 2006
---------------------------------------------------------
We did not earn any revenues during the period ending November 30, 2006. We do
not anticipate earning revenues until such time as we have entered into
commercial production of the Brookmount claims or the Mercedes property. We are
presently in the pre-exploration stage of our business and we can provide no
assurance that we will discover economic mineralization levels of minerals on
either property, or if such minerals are discovered, that we will enter into
commercial production.
We incurred operating expenses in the amount of $ 1,403,413 for the
fiscal year ended November 30, 2006 and $2,510,579 for the fiscal year ended
November 30, 2005. Mineral property costs were comprise of $103,352 and $196,947
during the fiscal year ended November 30, 2006 and 2005, respectively.
We have not attained profitable operations and are dependent upon
obtaining financing to pursue exploration activities. For these reasons our
auditors stated in their report that they have substantial doubt that we will be
able to continue as a going concern.
At November 30, 2006, we had assets of $ 24,838 while for the fiscal year ended
November 30, 2005, we had assets amounting to $70,306 consisting of cash on hand
of $18,091 for 2006 and $20,447 for the year 2005. Prepaid expenses for 2006
were $5,878 while for the year 2005, pre-paid expenses amounted to $5,000.
Capital assets for 2006 stood at $869.00 while such was $1,242 for the year
2005. At November 30, 2006, we had $233,034 in liabilities consisting of
accounts payable and accrued liabilities of $100,096 and $132,938 due to related
parties. As of November 30, 2005, we had liabilities consisting of accounts
payable and accrued liabilities in the amount of $33,223 and $58,516 in amounts
due to related parties.
17
ITEM 7 FINANCIAL STATEMENTS
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
NOVEMBER 30, 2006
REPORT OF INDEPENDENT REIGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' DEFICIT
NOTES TO THE FINANCIAL STATEMENTS
18
[DALE MATHESON Partnership of: Robert J Burkart, Inc. James F Carr-Hilton, Ltd.
[CARR-HILTON LABONTE Alvin F Dale, Ltd. Peter J Donaldson, Inc. R.J. LaBonte, Ltd.
------------------- Robert J Matheson, Inc. Fraser G Ross, Ltd.
[CHARTERED ACCOUNTANTS LOGO]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Brookmount Explorations Inc.:
We have audited the accompanying balance sheets of Brookmount Explorations Inc
(An Exploration Stage Company) as of November 30, 2005 and 2006 and the related
statements of operations, stockholders' deficit and cash flows for the years
then ended and the period from inception on December 9, 1999 to November 30,
2006. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
The balance sheets at November 30, 2004 and 2003 and for the years then ended
and the period from inception on December 9, 1999 to November 30, 2004 were
audited by other auditors whose report dated January 31, 2005 included an
explanatory paragraph regarding the Company's ability to continue as a going
concern. The financial statements for the period from December 9, 1999 (date of
inception) to November 30, 2004 reflect a net loss of $553,021 of the related
cumulative totals. The other auditors' report has been furnished to us, and our
opinion, insofar as it relates to amounts included for such periods, is based
solely on the report of such auditors.
We conducted our audits in accordance with the Standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of another auditor, these
financial statements present fairly, in all material respects, the financial
position of the Company, as of November 30, 2006 and 2005, and the results of
its operations, cash flows and changes in stockholders' deficit for the years
then ended and for the period from inception on December 9 , 1999 to November
30, 2006, in conformity with generally accepted accounting principles used in
the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, to date the Company has not generated any revenues from
operations and requires additional funds to meet its obligations and fund the
costs of its operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
"DMCL"
Dale Matheson Carr-Hilton LaBonte LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
February 16, 2007
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
BALANCE SHEETS
November 30, November 30,
------------
2006 2005
---- ----
ASSETS
------
Current assets
Cash $ 18,091 $ 20,447
Prepaid expenses 5,878 5,000
Advances - Note 3 - 43,617
----------------- ------------------
23,969 69,064
Equipment - Note 4 869 1,242
----------------- -----------------
$ 24,838 $ 70,306
================= =================
LIABILITIES
-----------
Current liabilities
Accounts payable and accrued liabilities $ 100,096 $ 33,223
Due to related parties - Note 7 132,938 58,516
----------------- -----------------
233,034 91,739
----------------- -----------------
STOCKHOLDERS' DEFICIT
---------------------
Common stock, $0.001 par value - Note 6
200,000,000 shares authorized
25,998,502 shares issued (2005 - 16,768,685) 25,998 16,768
Additional paid-in capital 4,239,419 3,031,999
Stock subscriptions receivable (6,600) (6,600)
Deficit accumulated during the exploration stage (4,467,013) (3,063,600)
----------------- -----------------
(208,196) (21,433)
------------------ ------------------
$ 24,838 $ 70,306
================= =================
Commitments and contingencies - Note 7 and 10
Subsequent events - Note 11
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
December 9, 1999
Year Year (date of
ended ended inception) to
November 30, November 30, November 30,
2006 2005 2006
---- ---- ----
Expenses
General and administrative - Note 7 $ 1,300,061 $ 313,632 $ 2,118,935
Mineral property costs - Note 5 103,352 2,196,947 2,348,078
-------------------------------------------------------------
Net loss $ (1,403,413) $ (2,510,579) $ (4,467,013)
================= ================= ====================
Basic and diluted loss per share $ (0.06) $ (0.17)
================ ================
Weighted average number of shares outstanding
23,109,944 14,880,769
================= =================
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
December 9,
1999
(date of
Year Year inception)
ended ended to
November 30, November 30, November 30,
2006 2005 2006
---- ---- ----
Cash Flows from Operating Activities
Net loss $ (1,403,413) $ (2,510,579) $ (4,467,013)
Add items not affecting cash:
Amortization 373 532 944
Capital contributions - - 29,250
Common stock issued for services 462,879 - 462,880
Common stock issued for mineral property 66,250 2,150,000 2,216,250
Provision for unrecoverable advances 193,618
- 193,617
Changes in non-cash working capital balances
related to operations
Prepaid expenses (878) (1,137) (5,878)
Accounts payable and accrued liabilities 90,577 (9,781) 123,800
----------------- ------------------ -----------------
Cash Flows Used In Operations (590,594) (370,965) (1,446,150)
------------------ ----------------- ------------------
Cash Flows from Investing Activities
Advances (150,000) (43,617) (193,617)
Acquisition of equipment - - ( 1,813)
----------------- ----------------- -----------------
Cash Flows Used In Investing Activities (150,000) (43,617) (195,430)
------------------ ------------------ ------------------
Cash Flows from Financing Activities
Due to related parties 230,293 - 288,809
Common stock issued, net 507,945 383,926 1,370,862
----------------- ----------------- -----------------
Cash Flows Provided by Financing Activities 738,238 383,926 1,659,671
----------------- ----------------- -----------------
Increase (decrease) in cash (2,356) (30,656) 18,091
Cash, beginning 20,447 51,103 -
----------------- ----------------- -----------------
Cash, ending $ 18,091 $ 20,447 $ 18,091
================= ================= =================
Supplemental Disclosure of Cash Flow
Information
Cash paid for:
Interest $ - $ - $ -
================= ================= =================
Income taxes $ - $ - $ -
================= ================= =================
Non-cash transactions - Note 8
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the period December 9, 1999 (Date of Inception) to November 30, 2006
Deficit
Accumulated
Additional Stock During the
Common Shares Paid-in Subscriptions Exploration
--------------------------
Number Par Value Capital Receivable Stage Total
------ --------- ------- ---------- ----- -----
Common stock issued for cash - at $0.001 3,500,000 $ 3,500 $ - $ - $ - $ 3,500
--------------- ----------- ----------- ------------ -------------- -----------
Balance, as at November 3,500,000 3,500 - - - 3,500
Common stock issued for cash - at $0.002 5,750,000 5,750 5,750 - - 11,500
- at $0.20 32,400 32 6,448 - - 6,480
Contributions to capital by officers - - 9,000 - - 9,000
Net loss - - - - (31,327) (31,327)
--------------- ----------- ----------- ------------ ----------------- --------
Balance, as at November 30, 2000 9,282,400 9,282 21,198 - (31,327) (847)
Contributions to capital by officers - - 9,000 - - 9,000
Net loss - - - - (17,215) (17,215)
--------------- ----------- ----------- ------------ ----------------- ---------
Balance, as at November 30, 2001 9,282,400 9,282 30,198 - (48,542) (9,062)
Contributions to capital by officers - - 9,000 - - 9,000
Net loss - - - - (17,811) (17,811)
--------------- ----------- ----------- ------------ ----------------- ----------
Balance, as at November 30, 2002 9,282,400 9,282 39,198 - (66,353) (17,873)
Common stock issued for cash - at $0.25 176,500 177 43,948 - - 44,125
- at $0.50 250,000 250 125,262 - - 125,512
Contributions to capital by officers - - 2,250 - - 2,250
Net loss - - - - (164,407) (164,407)
--------------- ----------- ----------- ------------ ----------------- ----------
Balance, as at November 30, 2003 9,708,900 9,709 210,658 - (230,760) (10,393)
Common stock issued for cash - at $0.50 575,948 576 287,398 (100) - 287,874
Net loss for the year - - - - (322,261) (322,261)
--------------- ----------- ----------- ------------ ----------------- ----------
Balance, as at November 30, 2004 10,284,848 10,285 498,056 (100) (553,021) (44,780)
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the period December 9, 1999 (date of inception) to November 30, 2006
Deficit
Accumulated
Additional Stock During the
Common Shares Paid-in Subscriptions Exploration
----------------------
Number Par Value Capital Receivable Stage Total
------ --------- ------- ---------- ----- -----
Common stock issued for cash
- at $0.21 100,000 100 21,130 - - 21,230
Common stock issued for cash - at $0.25 200,000 200 46,300 - - 46,500
Common stock issued for cash - at $0.35 134,100 134 46,867 (6,500) - 40,501
Common stock issued for cash - at $0.40 62,500 63 24,937 - - 25,000
Common stock issued for cash - at $0.50 411,190 411 205,184 - - 205,595
Common stock issued for cash - at $0.56 35,714 35 19,965 - - 20,000
Common stock issued for cash - at $0.60 10,333 10 6,190 - - 6,200
Common stock issued for cash - at $0.63 30,000 30 18,870 - - 18,900
Common stock issued for mineral
property - at $0.40 5,000,000 5,000 1,995,000 - - 2,000,000
Common stock issued for mineral
property - at $0.30 500,000 500 149,500 - - 150,000
Net loss - - - - 2,510,579) (2,510,579)
----------- ---------- ------------ --------- ----------------- -------------
Balance, as at November 30, 2005 16,768,685 16,768 3,031,999 (6,600) 3,063,600) (21,433)
Capital stock issued for cash - at $0.09 1,580,000 1,580 131,366 - - 132,946
- at $0.40 759,975 760 274,240 - - 275,000
- at $0.60 63,001 163 99,837 100,000
Common stock issued for mineral
property - at $0.10 100,000 100 9,900 - - 10,000
Common stock issued for mineral
property - at $0.15 375,000 375 55,875 - - 56,250
Common stock issued for services 7,921,000 7,921 2,021,241 - - 2,029,162
Common stock cancelled (5,291,000) (5,291) (1,560,992)
(1,566,283)
Common stock issued for debt 3,621,841 3,622 175,953 - - 179,575
Net loss - - - - (1,403,413) (1,403,413 )
--------------- --------- ------------- ---------- ---------------- ---------------
Balance, as at November 30, 2006 25,998,502 $ 25,998 $4,239,419 $ (6,600) $ 4,467,013) $ (208,196)
=============== ========= ============= =========== ================= ============
SEE ACCOMPANYING NOTES
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 1 Nature of Continued Operations and Basis of Presentation
--------------------------------------------------------
The Company is an exploration stage company. The Company is
incorporated in Nevada and was organized for the purpose of
acquiring, exploring and developing mineral properties. The
recoverability of amounts from properties acquired will be
dependant upon discovery of economically recoverable reserves,
confirmation of the Company's interest in the underlying property,
the ability of the Company to obtain necessary financing to
satisfy the expenditure requirements under the property agreement
and to complete the development of the property and upon future
profitable production.
Going Concern
-------------
The financial statements have been prepared on the basis of a
going concern which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has a working capital deficiency of $209,065 at November
30, 2006 and has incurred losses since inception of $4,467,013 and
further losses are anticipated in the development of its mineral
properties raising substantial doubt as to the Company's ability
to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on raising additional
capital to fund ongoing exploration and development and ultimately
on generating future profitable operations. The Company will
continue to fund operations with advances, other debt sources and
further equity placements.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America and are presented in United States
dollars.
Exploration Stage Company
-------------------------
The Company complies with Financial Accounting Standards Board
Statement No. 7 its characterization of the Company as an
exploration stage enterprise.
Mineral Property
----------------
The Company is primarily engaged in the acquisition, exploration
and development of mineral properties. Mineral property
acquisition costs are capitalized in accordance with EITF 04-2
when management has determined that probable future benefits
consisting of a contribution to future cash inflows, have been
identified and adequate financial resources are available or are
expected to be available as required to meet the terms of property
acquisition and budgeted exploration and development expenditures.
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 2 Summary of Significant Accounting Policies - (cont'd)
-----------------------------------------------------
Mineral Property - (cont'd)
---------------------------
Mineral property acquisition costs are expensed as incurred if the
criteria for capitalization is not met. Mineral property
exploration costs are expensed as incurred. When it has been
determined that a mineral property can be economically developed
as a result of establishing proven and probable reserves, the
costs incurred to develop such property are capitalized. As of the
date of these financial statements, the Company has incurred only
acquisition and exploration costs which have been expensed. To
date the Company has not established any proven or probable
reserves on its mineral properties.
Use of Estimates and Assumptions
--------------------------------
The preparation of 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 period.
Actual results could differ from those estimates.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated into their United States
dollar equivalents using foreign exchange rates which prevailed at
the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the year. Gains or losses
resulting from foreign currency transactions are included in
results of operations.
Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash, accounts payable, accrued liabilities
and amounts due to related parties approximates their fair value
because of the short maturity of these instruments. Unless
otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from these financial instruments.
Environmental Costs
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
and/or
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
remedial efforts are probable, and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with
the earlier of completion of a feasibility study or the Company's
commitments to plan of action based on the then known facts.
Income Taxes
------------
The Company follows the liability method of accounting for income
taxes. Under this method, deferred income tax assets and
liabilities are recognized for the estimated tax consequences
attributable to differences between the financial statement
carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
At November 30, 2006 a full deferred tax asset valuation allowance
has been provided and no deferred tax asset benefit has been
recorded.
Loss Per Share
--------------
Basic loss per share includes no dilution and is computed by
dividing loss available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive loss per share reflect the potential dilution of
securities that could share in the earnings of the Company.
Because the Company does not have any potentially dilutive
securities, basic loss per share is equal to dilutive loss per
share.
Stock-based Compensation
------------------------
The Company has not adopted a stock option plan and has not
granted any stock options. Accordingly no stock-based compensation
has been recorded to date.
Recent Accounting Pronouncements
--------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measures". This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted
accounting principles (GAAP), expands disclosures about fair value
measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS No.
157 will change current practice. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after
November 15, 2007, which for the Company would be the fiscal year
beginning December 1, 2007. The Company is currently evaluating
the impact of SFAS No. 157 but does not expect that it will have a
material impact on its financial statements.
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
-------------------------------------------
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans." This Statement requires an employer to recognize the over
funded or under funded status of a defined benefit post retirement
plan (other than a multiemployer plan) as an asset or liability in
its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through
comprehensive income. SFAS No. 158 is effective for fiscal years
ending after December 15, 2006 which for the Company would be
December 1, 2007. The Company does not expect that the
implementation of SFAS No. 158 will have any material impact on
its financial position and results of operations.
In September 2006, the SEC issued Staff Accounting Bulletin
("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements." SAB No. 108 addresses how the effects of
prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements.
SAB No. 108 requires companies to quantify misstatements using a
balance sheet and income statement approach and to evaluate
whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative
factors. SAB No. 108 is effective for periods ending after
November 15, 2006 which for the Company would be fiscal year
ending November 30, 2007. The Company is currently evaluating the
impact of adopting SAB No. 108 but does not expect that it will
have a material effect on its financial statements.
Note 3 Advances
----------
On May 13, 2005, the Company signed a "Letter of Agreement" with a
private corporation Jemma Resources Corp. ("Jemma") to acquire
100% of the outstanding capital stock of Jemma. Significant terms
contained in the Letter of Agreement were the appointment of two
of Jemma's directors to the Company's board of directors, Jemma
completing a debt financing of $15 million, and the Company's
right to elect not to proceed with the transaction thereby
resulting in all advances made to Jemma by the Company being
refundable, and the replacement of the Letter of Agreement with a
binding contract. The purchase price consisted of 3,000,000 shares
of common stock of the Company, 3,000,000 share purchase warrants
at $1.50 per warrant exercisable within 24 months from the date of
the agreement and approximately CDN $75,000 in refundable advances
to secure an extension for the option to purchase a mineral
property and for operating costs. During May 2005 two directors of
Jemma were appointed to the Company's board of directors. During
the year ended November 30, 2005, the Company advanced $43,617
(CDN $54,400) pursuant to the Letter of Agreement. At November 30,
2005 the Letter of Agreement had not been replaced by a binding
contract and Jemma had not raised the debt financing as
contemplated in the Letter of Agreement. Accordingly the Company's
management
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 3 Advances - (cont'd)
--------------------
decided not to proceed with this transaction. The decision was as
a result of the Company's due diligence and Jemma's inability to
raise the agreed financing. As a result, the advances totaling
$43,617 became refundable pursuant to the terms of the Letter of
Agreement. As of November 30, 2006, the Company has not received
the funds from Jemma. Due to delays in collecting this advance the
Company has provided a provision of $43,617.
During the year ending November 30, 2006 $150,000 was withdrawn
from the Company's bank account by a former director of the
Company. The former director was not an authorized signatory on
the Company's bank account and had not been granted any such
authority to withdraw the funds by the Company's Board of
Directors. Upon completion of an investigation, the Company
determined that the former director had not used the funds for
corporate purposes. To date, the money has not been returned. The
Company commenced legal proceedings against the former director in
an effort to recover the $150,000. Due to the uncertainty of
collection the Company has provided a provision of $150,000 (See
note 8).
Subsequent to November 30, 2006, the Supreme Court of British
Columbia ordered former director to pay the Company a sum of USD
$173,700 plus accrued interest of USD $5,341 (See note 10.)
Note 4 Equipment
---------
November 30,
November 30, 2006 2005
------------------------------------------------
Accumulated
Cost Amortization Net Net
---- ------------ --- ----
Computer equipment $ 1,813 $ 944 $ 869 $ 1,242
======= ============= ========== ===========
Note 5 Mineral Properties
------------------
a) Brookmount Claims, Abitibi West County, Quebec, Canada
------------------------------------------------------
During 2003 the Company acquired five mineral claims located
in the Chazel Township, in the Province of Quebec for $47,779.
At November 14, 2006 the mineral claims lapsed and the Company
chose not to renew them as the claims did not appear to be
promising.
b) Mercedes Property, Junin, Peru
------------------------------
Pursuant to a property acquisition agreement dated July 3,
2003 and amended on January 24, 2005, the Company acquired a
100% interest in 2,611 hectares located in Central Peru from a
director of the Company (the "Vendor") for consideration of
$22,500 (paid) and the issuance of 5,000,000 common shares
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 5 Mineral Properties - (cont'd)
-----------------------------
Mercedes Property, Junin, Peru - (cont'd)
-----------------------------------------
valued at $0.40 per share (issued). The property is held in
trust by the Vendor for the Company. Upon request from the
Company the title will be recorded in the name of the Company.
At November 30, 2006, the title of this property has not been
recorded in the name of the Company.
c) Rock Creek Claims, British Columbia, Canada
--------------------------------------------
On May 25, 2006 the Company entered into an option agreement
(the "Agreement") to acquire an option to purchase 100% of the
issued share capital of 722161 B.C. Ltd ("BC Ltd") on the
following terms:
1. The Company must issue 100,000 common shares upon execution
of the Agreement (issued);
2. The Company must make cash payments totalling CAD$250,000
as follows:
- August 15, 2006 - $10,000 (not paid);
- September 15, 2006 - $12,500 (not paid);
- November 15, 2006 - $12,500 (not paid);
- $12,500 (not paid) on or before January 15, 2007, and
installment payments of $12,500 quarterly thereafter
on or before the 15th days of April, July October and
January of each year until the total of $250,000 has
been paid or satisfied;
Although the Company has not made its cash payments in
accordance with the Agreement, BC Ltd has agreed to uphold
the Agreement until the Company raises the funds to make
its cash payments.
3. The Company must issue 500,000 common shares in four equal
tranches of 125,000 each on or before the 15th of October
in each of 2006, 2007,2008 and 2009. During the year ended
November 30, 2006, the Company issued 375,000 shares;
4. The Company must incur exploration expenses of $1,000,000
over a period of five years from the date of the
Agreement.
BC Ltd has a 56% interest in mineral claims located in the
Rock Creek area of British Columbia, Canada.
Due to the preliminary stage of exploration activities on the
Company's properties, to date, all mineral property
acquisition cost have been expensed.
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 6 Capital Stock
-------------
The total number of common shares authorized that may be
issued by the Company is 200,000,000 shares with a par value
of one tenth of one cent ($0.001) per share and no other class
of shares is authorized. At November 30, 2006 there were
25,998,502 shares issued and outstanding (2005 - 16,768,685).
During the year ended November 30, 2005 the Company issued
983,837 common shares for cash proceeds of $383,926. During
the year ended November 30, 2005, the Company issued 5,000,000
common shares valued at $0.40 per share pursuant to the
Mercedes Property acquisition agreement and issued 500,000
common shares valued at $0.30 per share pursuant to the Jemma
letter agreement (See note 3).
During the year ended November 30, 2006, the Company issued:
- 475,000 shares of common stock pursuant the proposed
acquisition of a mineral property (See note 5c);
- 4,291,000 shares of common stock with a fair value of
$1,390,284 to a director for business and consulting
(See note 3, 6 and 8). These shares were subsequently
cancelled during the year.
- 2,630,000 shares of common stock with a fair value of
$462,879 to its directors for the services provided to
date;
- 158,016 shares of common stock with a fair value of
$23,702 pursuant to a debt settlement agreement;
- 3,463,825 shares of common stock with a fair value of
$155,873 pursuant to a debt settlement agreement; and
- 2,502,976 shares of common stock pursuant a private
placement for cash proceeds of $507,946.
To November 30, 2006, the Company has not granted any stock
options or warrants.
Note 7 Related Party Transactions
--------------------------
The Company paid or incurred the following amounts to directors of
the Company, a former director and/or companies with directors or
officers in common:
2006 2005
---- ----
General and administrative:
Consulting fees $ 488,065 $ -
Management fees 270,000 173,500
----------- -----------
$ 758,065 $ 140,500
=========== ===========
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 7 Related Party Transactions - (cont'd)
-------------------------------------
The consulting and management fees were measured at the exchange
amount which is the amount agreed upon by the transacting parties.
Amounts due to related parties at November 30, 2006 are due to
directors of the Company in respect to unpaid management fees and
cash advances amounted to $132,938 (November 30, 2005-$58,516).
These amounts are unsecured. The amounts due for unpaid management
fees have no specific terms for repayment while the amounts due
for cash advances are due on December 31, 2006. The amounts due
for unpaid management fees are non-interest bearing while the
amounts due for cash advances bear interest at a rate of 10% per
annum.
During the year ended November 30, 2006, the Company issued
4,291,000 shares of its common stock with a fair value of
$1,390,284 to a director for services to be rendered during the
2006 fiscal year. Initially this amount was deferred and expensed
over the duration of the 2006 fiscal year. On April 26, 2006 the
services of this director were terminated (See Notes 3, 6 and 8).
During the period ended May 31, 2006 the Company expensed the
deferred amount of $1,039,495 as no further services will be
rendered by this director. The Company cancelled these shares in
full during the year ended November 30, 2006.
During the year ended November 30, 2006, the Company issued
3,630,000 shares of its common stock with a fair value of $638,880
to its directors and former director for the services provided, or
to be provided. The Company cancelled 1,000,000 of these shares
issued to a former director of the company during the year ended
November 30, 2006.
During the year ended November 30, 2006, the Company issued
3,463,825 shares of its common stock with a fair value of $155,874
to directors pursuant to debt settlement agreements.
Note 8 Non-cash Transactions
---------------------
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statement of
cash flows.
During the year ended November 30, 2005 the Company issued
5,000,000 common shares valued at $0.40 per share pursuant to the
Mercedes Property acquisition agreement and issued 500,000 common
shares valued at $0.30 per share pursuant to the Jemma letter
agreement (See note 3)
During the year ended November 30, 2006 the Company issued:
a) 100,000 common shares valued at $0.10 per share and 375,000
common shares valued at $0.15 per share pursuant to the option
agreement with BC Ltd;
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 8 Non-cash Transactions - (cont'd)
--------------------------------
a) 4,291,000 shares of common stock with a fair value of
$1,390,284 to a former director, who was terminated, for
business and consulting services to be provided.
b) 3,630,000 shares of common stock with a fair value of $638,880
to its directors for the services provided to date;
c) 158,016 shares of common stock with a fair value of $23,703
pursuant to a debt settlement agreement; and
d) 3,463,825 shares of common stock with a fair value of $155,873
pursuant to a debt settlement agreement.
These transactions were excluded from the statement of cash flows
for the year ended November 30, 2006, and for the period December
9, 1999 (date of inception) to November 30, 2006.
Note 9 Income taxes
------------
The significant components of the Company's deferred tax assets
are as follows:
2006 2005
---- ----
Deferred tax assets
Non-capital loss carryforwards $ 1,518,784 $ 1,041,624
Valuation allowance for deferred tax assets (1,518,784) (1,041,624)
-------------- --------------
$ - $ -
============== ==============
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards which is more
likely than not to be realized from future operations. The Company
has provided an allowance of 100% against all available income tax
loss carryforwards, regardless of their time of expiry, as it is
more likely than not that all of the deferred tax assets will not
be realized. No provision for income taxes has been provided in
these financial statements due to the net loss. At November 30,
2006, the Company has net operating loss carryforwards, which
expire commencing in 2019 totalling approximately $4,467,000
(2005: $3,063,600).
BROOKMOUNT EXPLORATIONS INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2006
Note 10 Litigation
----------
On June 29, 2006 a former director of the Company commenced legal
action against the Company and its directors (See notes 3 and 6).
The former director is claiming damages in excess of $5,000,000
for alleged breach of contract, libel, fraud, intentional deceit,
wrongful conduct and emotional distress. On February 12, 2007 the
United States District Court issued a notice of dismissal. The
legal action against the Company was dismissed in its entirety.
(See notes 3 and 11).
Note 11 Subsequent events
-----------------
On December 11, 2006 the Supreme Court of British Columbia ordered
former director to pay the Company a sum of USD $173,700 plus
interest accrued USD $5,341, making together the sum of $179,041.
On February 12, 2007 the United States District Court issued a
notice of dismissal with respect to the legal action against the
Company brought forward by a former director. The legal action
against the Company was dismissed in its entirety (See note 10).
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING
FINANCIAL DISCLOSURE
We have no changes in and disagreement with our accountants on
accounting financial disclosure
ITEM 8A: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
The Principal Executive Officer and Principal Financial Officer
conducted an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this report. Based on that evaluation, the
Principal Executive Officer and Principal Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of the end of the
period covered by this report. There were no significant changes in internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that occurred during the fourth quarter of 2005 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
19
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Served as a Director
Name Age Position with Registrant or Officer since
--------------------------------------------------------------------------------
Flueck 56 President, Director, Chairman of the Board March 21, 2003
Zaf Sungur 54 Chief Operating Officer, Secretary,
CFO, Director April 15, 2003
--------------------------------------------------------------------------------
The following describes the business experience of the Company's
directors and executive officers, including other directorships held in
reporting companies:
Each director of the Company serves for a term of one year and until
his successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the board of directors, for a term of one year and
until his successor is elected at the annual general meeting of the board of
directors and is qualified.
Set forth below is certain biographical information regarding each of
the Company's executive officers and directors.
Peter Flueck
------------
Mr. Flueck has serves as the President, Director and Chairman of the Board of
the Company since its formation. He brings to the Company a wealth of
experience, not only in the resource sector, but with extensive experience in
Peru as well. He is presently the President and sole shareholder of Grand Combe
Developments Ltd., a Canadian development company based in Edmonton, Alberta. He
has recently been the President of several mining companies based in Peru,
including Blower Investments A.V.V., Condor Resources A.V.V. Aruba, the Recursos
Mineros El Dorado and the Minera El Serrano, Peru.
He was also involved in the acquisition of several key mining
properties in Peru and headed up a series of negotiations with mining concerns
there in order to raise investor capital and to initiate the development of the
Mercedes property in Peru. Prior to his involvement within the mining industry,
Mr. Flueck was Vice President of Western Timber Export Ltd., an
Alberta-based company specializing in harvesting, sawmill production, pipeline
contracting, production sales and contract bidding. He has been a
successful, self-employed cattle rancher.
Zaf Sungur
----------
Mr. Sungur has served as the Company's Chief Operating Officer, Chief Financial
Officer, Director and Secretary since the Company began its operations. He has
over twenty years experience in real estate development, planning, project
management and marketing. Prior to joining the Company, he has been working as a
business consultant to clients, streamlining their businesses to achieve
increased efficiencies. For a ten-year period prior to that, he was the
President of Pan Pacific Investments, which specialized in all aspects of real
estate development, project management and business consulting. Mr. Sungur was
also President of Sunmark International marketing Mr. Sungur holds a Business
Degree (Bachelor of Commerce), has extensive experience in North American, Asian
and European business negotiations and is fluent in English and Turkish. He will
be responsible for the operations of the Company as it proceeds with its mining
projects in Peru and British Columbia.
20
All directors are elected annually by our shareholders and hold office
until the next Annual General Meeting. Each officer holds office at the pleasure
of the board of directors.
ITEM 10. EXECUTIVE 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 fiscal year ended November 30, 2006.
Name Title Year Salary Bonus Other Other Stock Restricted LTIP All Other
Annual Annual Awards Options/ Compen-
Compens Compens SARs Payouts sation
ation ation (#) ($)
--------------------------------------------------------------------------------------------------------------------
2006 295,999 - - - - - - -
Peter Flueck President 2005 $67,000 0 0 0 0 0 0 0
2004 $48,000 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
COO, 2006 406,879 - - - - - - -
Zaf Sungur Secretary, 2005 $67,000 0 0 0 0 0 0 0
Treasurer 2004 $48,000 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
2006 55,186 - - - - - - -
David Dadon Director 2005 - 0 0 0 0 0 0
2004 - 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
2006 - - - - - - - -
Victor Stilwell Vice President 2005 $39,500 0 0 0 0 0 0
2004 $48,000 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
Section 16(A) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish us with copies
of all Section 16(a) forms they file. Based on our review of the copies of such
forms we received, we believe that during the fiscal year ended November 30,
2006 all such filing requirements applicable to our officers and directors were
complied with exception that reports were filed late by the following persons:
Name and Number of Late Reports Transactions Known Failures to File
Principle Position Not Timely Reported a Required Form
--------------------------------------------------------------------------------------------------------------------
Peter Flueck 0 0 0
Zaf Sungur 0 0 0
Victor Stilwell 0 0 0
--------------------------------------------------------------------------------------------------------------------
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
21
The following table sets forth information regarding the beneficial
ownership of our shares of common stock at November 30, 2006 by (i) each person
known by us to be the beneficial owner of more than 5% of our outstanding shares
of common stock, (ii) each of our directors, (iii) our executive officers, and
(iv) by all of our directors and executive officers as a group. Each person
named in the table, has sole voting and investment power with respect to all
shares shown as beneficially owned by such person and can be contacted at our
executive office address
Title of Class Name of Beneficial Owner Shares of Common Stock Percent of Class
--------------------------------------------------------------------------------------------------------------------
Common Peter Flueck 7,201,277 27.69%
18912 - 121 Ave. NW
Edmonton, Alberta T5V 1R3
Common Zaf Sungur 4,150,548 15.96%
2005-327 W. Hastings
Vancouver, BC V6C 1B6
Total for All Directors and Officers as a Group 11,351,825 43.65%
Consisting of Three People
--------------------------------------------------------------------------------------------------------------------
The percent of class is based on 25,998,502 shares of common stock
issued and outstanding as of February 21, 2007.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended November 30, 2006, we paid or accrued
management fees to each of the following individuals as follows:
o Peter Flueck, our president $295,999;
o Zaf Sungur, our COO, secretary and treasurer $406879;
o David Dadon, director $55,186.
During the fiscal year 2003, the Company entered into an
agreement with its president, Peter Flueck, whereby the Company has agreed to
purchase a 100% interest in six mineral concessions comprising a total of 2,550
hectares located in Ahuigrande Parish, Comas District, Concepcion Province of
the Department of Junin, Peru. Pursuant to the agreement, as amended, the
Company must issue 5,000,000 shares of common stock (issued) to the directors of
the Company and pay $22,500 (paid) to Peter Flueck.
Otherwise, none of our directors or officers, nor any proposed nominee
for election as a director, nor any person who beneficially owns, directly or
indirectly, shares carrying more than 10% of the voting rights attached to all
of our outstanding shares, nor any promoter, nor 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.
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.
22
PART IV
Exhibits
3.1 Charter and By-Laws(1)
10.1 Mineral Property Purchase Agreement(2)
31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
-----------------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form 10-KSB dated December 27, 2000
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form 10-KSB, dated February 28, 2006).
Reports on Form 8-K
We did not file any reports on Form 8-K during the last quarter of
2006.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our current principal accountants, Dale Matheson Carr-Hilton Labonte,
Chartered Accountants billed the following fees for the services indicated.
Fiscal year ended Fiscal year ended
November 30, 2006 November 30, 2005
-----------------------------------------------------------------------
Audit fees $15,000 $12,500
Audit-related fees $15,000 $2,500
Tax fees - -
All other fees - -
-----------------------------------------------------------------------
Audit fees consist of fees related to professional services rendered in
connection with the audit of our annual financial statements, the review of the
financial statements included in each of our quarterly reports on Form 10-QSB.
The Company does not have an audit committee. Our board of directors
approves all costs associated with our outside auditors. The Board's policy is
to pre-approve all audit and permissible non-audit services performed by the
independent accountants. These services may include audit services,
audit-related services, tax services and other services. Under our Board's
policy, pre-approval is generally provided for particular services or categories
of services, including planned services, project based services and routine
consultations. In addition, the Board may also pre-approve particular services
on a case-by-case basis. Our Board approved all services that our independent
accountants provided to us during the past two fiscal years.
23
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Brookmount Explorations Inc.
By: /s/Peter Flueck
--------------------------
Peter Flueck
President, CEO & Director
Date: February 28, 2007
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.
By: /s/ Peter Flueck
----------------------
Peter Flueck
President, CEO & Director
Date: February 28, 2007
By:/s/ Zaf Sungur
------------------------
Zaf Sungur
COO, Secretary, Treasurer,
Principal Accounting
Officer and Director
Date: February 28, 2007