VNUE, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
February 28, 2011
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ To ______________________
Commission file number
000-53462
BUCKINGHAM EXPLORATION INC.
(Exact name of registrant as specified in its charter)
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Nevada
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98-054-3851
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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Suite 418-831 Royal Gorge Blvd.
Cañon City, CO 81212, USA
(Address of principal executive offices)
(604) 737-0203
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of for such shorter period that the registrant was required to submit and post such files).
Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
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Non-accelerated filer
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Smaller reporting company
þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
þ
As of April 13, 2011, the registrant’s outstanding common stock consisted of 50,118,736 shares.
TABLE OF CONTENTS
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1
Buckingham Exploration Inc.
(An Exploration Stage Company)
February 28, 2011
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Consolidated Balance Sheets (Unaudited)
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F-1
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Consolidated Statements of Operations (Unaudited)
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F-2
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Consolidated Statements of Cash Flows (Unaudited)
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F-3
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Notes to (Unaudited) Consolidated Financial Statements
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F-4
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2
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Balance Sheets
(Expressed in US dollars)
(Unaudited)
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February 28,
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May 31,
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|||||||
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2011
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2010
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|||||||
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ASSETS
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||||||||
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Current Assets
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||||||||
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Cash
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$ | 135,967 | $ | 2,194 | ||||
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Other receivables
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7,345 | 3,621 | ||||||
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Prepaid expense
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1,544 | – | ||||||
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Total Current Assets
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144,856 | 5,815 | ||||||
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Property and Equipment, net
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1,466 | 1,973 | ||||||
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Total Assets
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$ | 146,322 | $ | 7,788 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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Accounts payable
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$ | 120,715 | $ | 49,038 | ||||
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Accounts payable – related party
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92,359 | 190,146 | ||||||
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Advances-related party
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8,465 | 23,027 | ||||||
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Accrued liabilities
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– | 13,528 | ||||||
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Loans payable
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60,932 | 104,114 | ||||||
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Total Current Liabilities
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282,471 | 379,853 | ||||||
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Stockholders’ Deficit
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||||||||
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Preferred Stock, 20,000,000 shares authorized, $0.0001 par value,
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None issued and outstanding
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– | – | ||||||
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Common Stock, 300,000,000 shares authorized, $0.0001 par value
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50,118,736 shares issued and outstanding (May 31, 2010 – 112,818 shares)
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5,066 | 11 | ||||||
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Additional Paid-in Capital
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7,473,372 | 6,949,353 | ||||||
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Deficit Accumulated During the Exploration Stage
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(7,614,587 | ) | (7,321,429 | ) | ||||
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Total Stockholders’ Deficit
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(136,149 | ) | (372,065 | ) | ||||
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Total Liabilities and Stockholders’ Deficit
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$ | 146,322 | $ | 7,788 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-1
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Statements of Operations
(Expressed in US dollars)
(Unaudited)
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For the
Three Months
Ended
February 28,
2011
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For the
Three Months
Ended
February 28,
2010
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For the
Nine Months
Ended
February 28,
2011
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For the
Nine Months
Ended
February 28,
2010
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Accumulated
from April 4,
2006
(Date of
Inception) to
February 28,
2011
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||||||||||||||||
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Expenses
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General and administrative
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$ | 39,346 | $ | 31,971 | $ | 119,863 | $ | 96,341 | $ | 1,844,381 | ||||||||||
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Exploration mineral property costs
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6,020 | 5,850 | 15,681 | 5,850 | 21,531 | |||||||||||||||
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Professional fees
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33,546 | 15,692 | 157,614 | 83,329 | 638,222 | |||||||||||||||
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Total Expenses
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78,912 | 53,513 | 293,158 | 185,520 | 2,504,134 | |||||||||||||||
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Net Loss Before Other Expenses
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(78,912 | ) | (53,513 | ) | (293,158 | ) | (185,520 | ) | (2,504,134 | ) | ||||||||||
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Other Income (Expenses)
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Interest income
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– | – | – | – | 2,276 | |||||||||||||||
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Miscellaneous income
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– | – | – | – | 1,467 | |||||||||||||||
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Interest expense
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– | – | – | (12,513 | ) | (59,588 | ) | |||||||||||||
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Accretion of convertible debenture discount
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– | – | – | (8,433 | ) | (31,396 | ) | |||||||||||||
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Gain on disposal of property and equipment
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– | 7,277 | – | 7,277 | 7,277 | |||||||||||||||
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Total Other Income (Expenses)
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– | 7,277 | – | (13,669 | ) | (79,964 | ) | |||||||||||||
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Net Loss From Continuing Operations
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(78,912 | ) | (46,236 | ) | (293,158 | ) | (199,189 | ) | (2,584,098 | ) | ||||||||||
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Gain on disposal of discontinued operations
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– | – | – | 453,987 | (5,030,489 | ) | ||||||||||||||
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Results from discontinued operations
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– | – | – | (4,320 | ) | – | ||||||||||||||
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Net Loss
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$ | (78,912 | ) | $ | (46,236 | ) | $ | (293,158 | ) | $ | 250,478 | $ | (7,614,587 | ) | ||||||
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Net Loss Per Share – Basic and Diluted
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Net Income Loss Before Discontinued Operations
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$ | (0.00 | ) | $ | (0.36 | ) | $ | (0.05 | ) | $ | (1.72 | ) | ||||||||
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Discontinued Operations
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– | – | – | (3.88 | ) | |||||||||||||||
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Net Loss
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$ | – | $ | (0.36 | ) | $ | (0.05 | ) | $ | (2.16 | ) | |||||||||
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Weighted Average Shares Outstanding
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19,390,000 | 118,530 | 6,497,000 | 116,005 | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-2
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)
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For the
Nine Months
Ended
February 28,
2011
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For the
Nine Months
Ended
February 28,
2010
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Accumulated
from
April 4,
2006
(Date of
Inception) to
February 28,
2011
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Operating Activities
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Net income (loss) for the period
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$ | (293,158 | ) | $ | 250,478 | $ | (7,614,587 | ) | ||||
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Adjustments to reconcile net loss to net cash used in operating activities
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Accretion of convertible debenture discount
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– | 8,433 | 31,396 | |||||||||
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Amortization
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507 | – | 564 | |||||||||
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Common shares issued for services
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– | – | 32,000 | |||||||||
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Shares issued for mineral property costs
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– | 1,100 | 2,301,100 | |||||||||
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Non cash gain from settlement agreement
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- | (453,987 | ) | |||||||||
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Impairment of mineral property costs
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– | – | 2,230,125 | |||||||||
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Stock-based compensation
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– | – | 576,120 | |||||||||
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Gain on disposal of property and equipment
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– | (7,277 | ) | (7,277 | ) | |||||||
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Loss from discontinued operations
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– | 1,087 | 37,785 | |||||||||
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Changes in operating assets and liabilities
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Accounts payable and accrued liabilities
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81,823 | 149,152 | 456,391 | |||||||||
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Other receivables
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(3,724 | ) | (2,622 | ) | (9,633 | ) | ||||||
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Prepaid expenses
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(1,544 | ) | – | (2,587 | ) | |||||||
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Due to related parties
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(97,787 | ) | – | (109,870 | ) | |||||||
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Net Cash Used in Operating Activities
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(313,883 | ) | (53,636 | ) | (2,078,473 | ) | ||||||
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Investing Activities
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Acquisition of mineral properties
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– | – | (2,230,125 | ) | ||||||||
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Acquisition of property and equipment
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– | – | (86,763 | ) | ||||||||
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Proceeds from disposition of subsidiaries
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– | 32,970 | 32,970 | |||||||||
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Proceeds from disposal of property and equipment
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– | 7,277 | 24,777 | |||||||||
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Proceeds from disposal of property and equipment in discontinued operations
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– | – | 12,496 | |||||||||
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Net Cash Provided by (Used in) Investing Activities
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– | 40,247 | (2,246,645 | ) | ||||||||
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Financing Activities
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Bank indebtedness
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– | 3,217 | – | |||||||||
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Advances from related parties
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- | 6,900 | 196,671 | |||||||||
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Repayments to related parties
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(14,562 | ) | – | (50,561 | ) | |||||||
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Proceeds from notes payable
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– | – | 61,694 | |||||||||
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Repayment of note payable
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(50,000 | ) | – | (73,362 | ) | |||||||
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Proceeds from loans payable
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12,218 | – | 387,218 | |||||||||
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Repayment of loans payable
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– | – | (25,000 | ) | ||||||||
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Proceeds from the issuance of common stock
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500,000 | – | 4,161,575 | |||||||||
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Proceeds from common stock subscription
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– | – | 10,350 | |||||||||
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Share issuance costs
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– | – | (207,500 | ) | ||||||||
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Net Cash Provided by Financing Activities
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447,656 | 10,117 | 4,461,085 | |||||||||
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Increase (Decrease) In Cash
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133,773 | (3,272 | ) | 135,967 | ||||||||
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Cash - Beginning of Period
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2,194 | 3,272 | – | |||||||||
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Cash - End of Period
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$ | 135,967 | $ | – | $ | 135,967 | ||||||
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Non-Cash Investing and Financing Activities:
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Convertible debt issued to settle loans payable
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$ | – | $ | – | $ | 350,000 | ||||||
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Convertible debt issued to settle related party advances
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$ | – | $ | – | $ | 150,000 | ||||||
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Common stock issued for mineral property acquisitions
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$ | – | $ | 1,100 | $ | 2,201,100 | ||||||
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Common stock issued for finders fee
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$ | – | $ | – | $ | 100,000 | ||||||
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Common stock issued for services
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$ | – | $ | – | $ | 172,000 | ||||||
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Disposal of property and equipment for debt settlement
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$ | – | $ | 16,952 | $ | 16,952 | ||||||
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Conversion of debt to stock
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$ | 5,400 | $ | - | $ | 5,400 | ||||||
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Issuance of stock for settlement of accrued interest
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$ | 23,674 | $ | - | $ | 477,661 | ||||||
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Supplemental Disclosures
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Interest paid
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$ | – | $ | – | $ | 21,897 | ||||||
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Income tax paid
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$ | – | $ | – | $ | – | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-3
1.
Nature of Operations and Continuance of Business
Buckingham Exploration Inc. (the “Company”) was incorporated in the State of Nevada on April 4, 2006. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915,
Development Stage Entities.
The Company’s principal business is the acquisition and exploration of mineral properties.
On August 9, 2010, the Company incorporated 0887717 B.C. Ltd., a wholly-owned subsidiary in British Columbia, Canada.
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at February 28, 2011, the Company has a working capital deficit of $137,615 and an accumulated deficit of $7,614,587. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As at February 28, 2011, the Company had $135,967 cash in the bank. The Company requires a minimum of $250,000 to proceed with their plan of operations over the next twelve months. If they achieve less than the full amount of financing that they require they will scale back planned exploration activities and day to day operations in order to reduce exploration expenses and general and administrative expenses to a level appropriate to the financial resources available. There can be no assurance that the Company will be able to raise sufficient funds to pay the expected operating expenses for the next twelve months.
The Company currently trades on the OTCBB under the symbol ‘BUKX.OB’.
2.
Interim Financial Statements
The interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended May 31, 2010, included in the Company’s Annual Report on Form 10-K filed on September 14, 2010 with the SEC.
The consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at February 28, 2011, and the results of its operations and cash flows for the three and nine months ended February 28, 2011 and 2010. The results of operations for the three and nine months ended February 28, 2011 are not necessarily indicative of the results to be expected for future quarters or the full year.
Certain prior year amounts have been reclassified to conform to current year presentation.
F-4
3.
Mineral Property
On August 23, 2010, 0887717 B.C. Ltd. (“0887717”), a British Columbia company and wholly owned subsidiary of the Company, entered into an option agreement (the “Option Agreement”) with Murray Scott Morrison, pursuant to which 0887717 was granted the option to acquire a 100% interest in a mineral property located in the Greenwood Mining Division, British Columbia, Canada (the “Property”). In accordance with the provisions of the Option Agreement, 0887717 may exercise its option by making a payment of $5,000 on the date of execution of the Option Agreement (paid), incurring not less than $10,000 in expenditures related to exploration and development on the Property prior to September 30, 2010 (paid) and paying a sum of $1,000 on or before November 30, 2010. Pursuant to the terms of the Option Agreement, Mr. Morrison was granted a stock option to purchase up to 10% of the total issued and outstanding share capital of the Company at the total price of $1.00, which may be exercised when a probable mineral reserve is discovered on the Property. The Stock Option expires after 36 months from the date of the Option Agreement.
4.
Related Party Transactions and Balances
Included in accounts payable-related party and advances by related party at February 28, 2011, is $100,824 (May 31, 2010 - $213,173) owing to the President of the Company, representing unpaid management fees, cash advances and expenses paid on behalf of the Company. These amounts are unsecured, non-interest bearing and have no repayment terms.
5. Loans Payable
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(a)
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During the year ended May 31, 2010, the Company received operating loans in the amount of $38,332 (Cdn$40,000). During the nine months ended February 28, 2011, this amount was increased by $12,218 (Cdn$10,000). The loans were unsecured, bear 1% interest per month and payable upon demand. During the nine months ended February 28, 2011, the Company repaid the loan balance and accrued interest.
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(b)
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On May 5, 2010, the Company entered into two promissory note agreements with its legal counsel for $65,782, which represents the debt owed by the Company to its legal counsel for services rendered on or before April 30, 2010. The loans are unsecured, non-interest bearing, and payable on demand. On February 25, 2011, the Company entered into a debt conversion agreement whereby it converted $4,850 of the loan and $550 of accounts payable into 540,000 shares of common stock.
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6. Common Stock
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(a)
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On July 23, 2010, the Company effected a 1 for 400 reverse stock split of the issued and outstanding common stock. As a result, the issued and outstanding shares decreased from 45,126,850 shares of common stock to 112,818 shares of common stock. The number of shares that the Company is authorized to issue did not change as a result of the common stock split and remain at 80,000,000 common shares and 20,000,000 preferred shares all with a par value of $0.0001. All share, stock option and warrant amounts have been retroactively adjusted for all periods presented.
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(b)
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On August 20, 2010, the Company issued 2,536 post-split restricted common shares at $4 per share in full consideration of $10,146 in interest accrued.
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(c)
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On August 20, 2010, the Company issued 3,382 post-split restricted common shares at $4 per share in full consideration of $13,528 in interest accrued.
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(d)
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On December 20, 2010, the Company completed a private placement of 15,000,000 units at $0.01 per unit, for proceeds of $150,000. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant, with each full warrant exercisable at a price of $0.10 per share for 12 months.
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(e)
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On December 21, 2010, the Company increased its authorized capital from 80,000,000 shares of common stock with a par value of $0.0001 to 300,000,000 shares of common stock with a par value of $0.0001.
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(f)
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On February 10, 2011, the Company completed a private placement of 35,000,000 units at $0.01 per unit, for proceeds of $350,000. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant, with each full warrant exercisable at a price of $0.10 per share for 12 months.
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(g)
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On February 25, 2011, the Company issued 540,000 shares of common stock at a fair value of $0.01 per share in exchange for the settlement of $5,400 in debt (Note 5(b)).
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F-5
7. Share Purchase Warrants
A summary of the changes in the Company’s common share purchase warrants is presented below:
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Number
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Weighted Average
Exercise Price
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|||||||
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Balance, May 31, 2010
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– | – | ||||||
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Issued
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25,000,000 | $ | 0.10 | |||||
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Balance, February 28, 2011
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25,000,000 | $ | 0.10 | |||||
As at February 28, 2011, the intrinsic value of the common share purchase warrants was $nil.
Additional information regarding warrants as at February 28, 2011, is as follows:
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Number of Warrants
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Exercise Price
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Expiry Date
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7,500,000
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$0.10
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December 20, 2011
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17,500,000
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$0.10
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February 10, 2012
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25,000,000
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F-6
Cautionary Statement Regarding Forward-Looking Information
The statements in this report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995
, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our plan of operations and financing.
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
Presentation of Information
As used in this report: (i) the terms "we", "us", "our" and the “Company” mean Buckingham Exploration Inc. and its subsidiaries, unless the context requires otherwise, and (ii) all dollar amounts in this report refer to US dollars unless otherwise indicated.
On July 23, 2010, we completed a reverse split of our shares of common stock on a 1-for-400 basis. All share amounts in this report are presented on a post-split basis, unless otherwise indicated.
On October 7, 2010, Manning Elliott LLP resigned as our independent auditors and MaloneBailey LLP were appointed in their place. See the current report on Form 8-K filed with the SEC on October 13, 2010 in respect of the change of our independent auditors for more information.
Overview
We were incorporated as a Nevada company on April 4, 2006. We have been engaged in the acquisition and exploration of mineral properties since our inception. We are an exploration stage company and have not generated any revenues and have incurred losses since inception.
We currently own options to acquire a 100% interest in two mineral properties, the Lady Ermalina and Dome mineral properties, located in the Province of British Columbia, Canada. We have not conducted any material exploration work on our mineral properties and none of our properties has been determined to contain any mineral resources or reserves of any kind.
We previously owned interests in two mineral properties located in the State of Colorado, the High Park mineral property and the Proteus mineral property. During the year ended May 31, 2009, we defaulted under three secured convertible debenture purchase agreements as we were unable to pay fees to maintain our interests in these properties. We entered into a settlement agreement on August 27, 2009 with one of our debentureholders in settlement of amounts owning under our convertible debentures which required the transfer of all of our interest in our two subsidiaries that held these properties and all of their assets to the debentureholder, including all mineral claims, intellectual property rights and property and equipment, which was completed in October 2009.
See our annual report on Form 10-K/A for the year ended May 31, 2010 for more information.
3
On December 20, 2010, we completed the sale of 15,000,000 units to an investor at a price of $0.01 per unit, with each unit comprised of one share of common stock and one-half of one common stock purchase warrant, with each full warrant exercisable at a price of $0.10 per share for 12 months, for gross proceeds of $150,000. Pursuant to the terms of the offering, we appointed a new director of our board of directors who is a director of the investor in the offering, who is expected to introduce new business opportunities to us. However, no such opportunities have been determined to date and there can be no assurance that such opportunities will be determined or that we will enter into any further transactions.
On December 21, 2010, we completed an amendment to our bylaws to make them more comprehensive and an increase in our authorized capital from 80,000,000 shares of common stock, par value $0.0001 per share, to 300,000,000 shares of common stock, par value $0.0001 per share, to enable further financing.
On February 11, 2011, we completed the sale of 35,000,000 units to certain investors at a price of $0.01 per unit, with each unit comprised of one share of common stock and one-half of one common stock purchase warrant, with each full warrant exercisable at a price of $0.10 per share for 12 months, for gross proceeds of $350,000.
Our plan of operations for the next 12 months is to raise additional financing and acquire another mineral property and mineral claims. We also plan to conduct a small exploration project on each of our current properties. We anticipate we will require approximately $0.5 million to carry out plans over the next 12 months. As at February 28, 2011, we had cash of $135,967 and a working capital deficit of $143,015 and will require significant financing to pursue our plans.
We plan to obtain the required financing from the sale of our common stock or loans. There can be no assurance that we will obtain any additional financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.
Results of Operations
The following discussion and analysis of our results of operations and financial condition for the three and nine months ended February 28, 2011 should be read in conjunction with our unaudited interim consolidated financial statements and related notes included in this report, as well as our most recent annual report on Form 10-K/A for the year ended May 31, 2010 filed with the SEC.
Three Months Ended February 28, 2011 Compared to Three Months Ended February 28, 2010
Lack of Revenues
We have earned no revenues and have sustained operational losses since our inception on April 4, 2006 to February 28, 2011. As of February 28, 2011, we had an accumulated deficit of $7,614,587. We anticipate that we will not earn any revenues during the current fiscal year or in the foreseeable future as we are an exploration stage company.
Expenses
From April 4, 2006 (date of inception) to February 28, 2011, our total expenses were $2,504,134, comprised of $638,222 in professional fees, $21,531 in mineral property costs and $1,844,381 in general and administrative expenses.
Our total expenses increased to $78,912 for the three months ended February 28, 2011 from $53,513 for the three months ended February 28, 2010. The increase in total expenses was mainly due to higher professional fees and general and administrative expenses. Professional fees increased to $33,546 in the current period from $15,692 in the prior period primarily due to increased financing activities and reporting obligations. General and administrative expenses increased to $39,346 in the current period from $31,971 in the prior period primarily due to increased financing activities. We incurred exploration costs on our properties of $6,020 in the current period, compared to $5,850 in the prior period.
We recognized total other expenses of $79,964 from our inception to February 28, 2011, primarily due to interest expense and amounts owing under our convertible debentures. For the three months ended February 28, 2011, we recognized total other expenses of $0, compared to total other income of $7,277 for the three months ended February 28, 2010, due to a gain on the disposal of property and equipment.
Net Loss
For the three months ended February 28, 2011, we recognized a net loss of $78,912, compared to $46,236 for the three months ended February 28, 2010.
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Nine Months Ended February 28, 2011 Compared to Nine Months Ended February 28, 2010
Lack of Revenues
We have earned no revenues and have sustained operational losses since our inception on April 4, 2006 to February 28, 2011. As of February 28, 2011, we had an accumulated deficit of $7,614,587. We anticipate that we will not earn any revenues during the current fiscal year or in the foreseeable future as we are an exploration stage company.
Expenses
Our total expenses increased to $293,158 for the nine months ended February 28, 2011 from $185,520 for the nine months ended February 28, 2010. The increase in total expenses was mainly due to higher professional fees and general and administrative expenses. Professional fees increased to $157,614 in the current period from $83,329 in the prior period primarily due to increased financing activities and reporting obligations. General and administrative expenses increased to $119,863 in the current period from $96,341 in the prior period primarily due to increased financing activities. We incurred exploration costs on our properties of $15,681 in the current period, compared to $5,850 in the prior period.
For the nine months ended February 28, 2011, we recognized total other expenses of $0, compared to $13,669 for the nine months ended February 28, 2010, due to interest expense and amounts owing under our convertible debentures, partially offset by a gain on the disposal of property and equipment.
Gain From Discontinued Operations
We recognized a gain from discontinued operations of $0 during the nine months ended February 28, 2011, compared to $449,667 during the nine months ended February 28, 2010, due to the transfer of all of our interest in two subsidiaries (and related assets) as a result of our default under our convertible debentures.
Net Loss
For the nine months ended February 28, 2011, we recognized a net loss of $293,158, compared to net income of $250,478 for the nine months ended February 28, 2010 due to the sale of our subsidiaries.
Liquidity and Capital Resources
As of February 28, 2011, we had cash of $135,967, a working capital deficit of $137,615, total assets of $146,322, total liabilities of $282,471 and an accumulated deficit of $7,614,587. As of May 31, 2010, we had cash of $2,194, a working capital deficit of $385,668, total assets of $7,788, total liabilities of $379,853 and an accumulated deficit of $7,321,429.
Financing Activities
We have funded our operations primarily by a combination of private placements, advances from related parties and loans. From April 4, 2006 (date of inception) to February 28, 2011, financing activities provided cash of $4,461,085, primarily from the sale of our common stock and loans.
During the nine months ended February 28, 2011, financing activities provided cash of $447,656, compared to $10,117 in the nine months ended February 28, 2010, primarily from the sale of our common stock and loans.
On December 20, 2010 and February 11, 2011, we raised gross proceeds of $150,000 and $350,000, respectively, from private placements of units. Pursuant to the terms of the initial offering, we appointed a new director to our board of directors who is expected to introduce new business opportunities for our company. However, no such opportunities have been determined at this time and there can be no assurance that we will enter into any further transactions.
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Operating Activities
Operating activities used cash of $313,883 for the nine months ended February 28, 2011, compared to $53,636 for the nine months ended February 28, 2010. An increase in accounts payable and accrued liabilities provided cash of $81,823 in the nine months ended February 28, 2011, compared to $149,152 in the prior period. Amounts due to related parties used cash of $97,787 in the current period, compared to $0 in the prior period.
Investing Activities
There were no investing activities during the nine months ended February 28, 2011. In the nine months ended February 28, 2010, investing activities provided cash of $40,247, primarily from proceeds from the sale of subsidiaries related to the settlement of our convertible debentures.
We expect that our total expenses will increase over the next year as we increase our business operations and exploration activities on our mineral properties. We do not anticipate generating any revenues for the foreseeable future. Our plan of operations for the next 12 months is to raise additional financing and acquire another mineral property and mineral claims. We also plan to conduct a small exploration project on each of our current properties. We anticipate we will require approximately $0.5 million to carry out our plans over the next 12 months and will require significant financing to pursue our plans.
We plan to obtain the required financing from the sale of our common stock or loans. There can be no assurance that we will obtain any additional financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Going Concern
Our financial statements for the period ended February 28, 2011 have been prepared on a going concern basis and Note 1 to the statements identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our common stock and loans from related and other parties to fund our operations. We do not anticipate generating any revenues in the foreseeable future, and if we are unable to raise equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.
Not applicable.
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Evaluation of Disclosure
Controls
and Procedures
In connection with the preparation of this report, an evaluation was carried out by our sole officer of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of February 28, 2011. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below, our sole officer concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our sole executive officer to allow timely decisions regarding required disclosures.
A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of disclosure controls and procedures as of February 28, 2011, the following significant deficiencies were identified:
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1.
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Certain entity level controls establishing a “tone at the top” were considered material weaknesses. The Company has a sole officer/director and does not have a majority of independent directors on its board or audit committee. The Company has no policy on fraud and no code of ethics at this time.
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All cash management is conducted by our sole officer, which may result in misappropriation of funds.
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The lack of independent directors exercising an oversight role increases the risk of management override and potential fraud.
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The Company is in the development stage with limited resources and limited monitoring of internal controls and the assessment of risk is conducted.
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Management is currently evaluating remediation plans for the above control deficiencies.
In light of these control deficiencies, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s disclosure controls or internal controls.
Changes in Internal Control
During the quarter ended February 28, 2011, there were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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On August 14, 2009, Leslie Rudolph filed a Statement of Claim in the Provincial Court of British Columbia (Small Claims Court) to initiate a lawsuit against us. In the Statement of Claim, Mr. Rudolph seeks judgment for $7,832.64 and costs with respect to accounting services he provided to us from June 1, 2008 to November 30, 2008. On December 1, 2009, the Court issued a default order against us for the sum of $8,261 plus court order interest from December 30, 2008 to date. We made an application to the Court to cancel the default order, which was subsequently dismissed.
Other than as described above, we are not a party to any pending legal proceedings and are not aware of any legal proceedings threatened against us or of which our property is the subject. None of our directors, officers or affiliates: (i) are a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings.
None.
None.
None.
None
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Exhibit
Number
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Exhibit
Description
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Buckingham Exploration Inc.
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/s/
C. Robin Relph
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Date: April 14, 2011
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C. Robin Relph
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President and Chief Executive Officer
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TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 2. Management S Discussion and Analysis Of Financial Condition andItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Control and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 2. Unregistered Sales Of Equity SecuritiesItem 3. Defaults Upon Senior SecuritiesItem 4. Submission Of Matters To A Vote Of Security HoldersItem 5. Other InformationItem 6. Exhibits