WEDOTALK INC. - Quarter Report: 2008 May (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
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[X]
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Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
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For
the quarterly period ended May 31,
2008
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[ ]
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Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
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For
the transition period to __________
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Commission
File Number: 333-148545
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Hammer Handle Enterprises,
Inc.
(Exact
name of small business issuer as specified in its charter)
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Nevada
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N/A
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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1212 Haida Avenue,
Saskatoon, Saskatchewan, Canada S7M 3W7
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(Address
of principal executive offices)
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206-202-3226
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(Issuer’s
telephone number)
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_______________________________________________________________
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(Former
name, former address and former fiscal year, if changed since last
report)
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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 such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days [X]
Yes [ ] No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
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[ ]
Large accelerated filer Accelerated filer
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[ ]
Non-accelerated filer
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[X]
Smaller reporting company
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). [X] Yes [ ] No
State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 2,870,000 common shares as of May 31,
2008.
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Page
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PART I – FINANCIAL
INFORMATION
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PART II – OTHER
INFORMATION
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PART
I - FINANCIAL INFORMATION
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Our
unaudited financial statements included in this Form 10-Q are as
follows:
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These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-Q. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the interim
period ended May 31, 2008 are not necessarily indicative of the results that can
be expected for the full year.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
As
at May 31, 2008 and November 30, 2007
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ASSETS
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May 31, 2008
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November 30, 2007
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(unaudited)
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(audited)
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Current
assets
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|||||
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Cash
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$ | 17,918 | $ | 60,607 | |
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Prepaid
expenses
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6,667 | 0- | |||
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Total
current assets
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24,585 | 60,607 | |||
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TOTAL
ASSETS
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$ | 24,585 | $ | 60,607 | |
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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Current
liabilities
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Accounts
payable and accrued liabilities
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$ | 9,252 | $ | 4,000 | |
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TOTAL
LIABILITIES
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9,252 | 4,000 | |||
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STOCKHOLDERS’
EQUITY:
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Common
stock, $.001 par value, 50,000,000 shares authorized, 2,870,000 shares
issued and outstanding
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2,870 | 2,870 | |||
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Additional
paid in capital
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68,130 | 68,130 | |||
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Deficit
accumulated during the exploration stage
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(55,667) | (14,393) | |||
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Total
stockholders’ equity
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15,333 | 56,607 | |||
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TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 24,585 | $ | 60,607 | |
See
accompanying notes to financial statements.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
Three
months and six months ended May 31, 2008
Period
from June 29, 2007 (Inception) to May 31, 2008
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Three
months
ended
May 31, 2008
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Six
months
ended
May 31, 2008
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Period
from June
29,
2007
(Inception)
to
May 31, 2008
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Revenues
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$ | 0 | $ | 0 | $ | 0 | ||
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General
and administrative expenses:
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Professional
fees
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16,782 | 25,715 | 29,715 | |||||
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Foreign
exchange loss
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-0- | -0- | 692 | |||||
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Exploration
costs
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3,737 | 10,047 | 18,547 | |||||
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Other
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2,910 | 5,512 | 6,713 | |||||
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Total
general and administrative
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23,429 | 41,274 | 55,667 | |||||
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Net
loss
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$ | (23,429) | $ | (41,274) | $ | (55,667) | ||
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Net
loss per share:
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Basic
and diluted
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$ | (0 .01) | $ | ( 0 .01) | ||||
| Weighted average shares outstanding: | ||||||||
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Basic
and diluted
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2,870,000 | 2,870,000 | ||||||
See
accompanying notes to financial statements.
HAMMER HANDLE ENTERPRISES
INC.
(A
EXPLORATION STAGE COMPANY)
Period
from June 29, 2007 (Inception) to May 31, 2008
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Common
stock
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Additional
paid-in
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Deficit
accumulated
during the
exploration
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Shares
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Amount
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capital
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stage
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Total
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Issuance
of common stock for
cash to founders
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2,400,000 | $ | 2,400 | $ | 21,600 | $ | - | $ | 24,000 | ||||
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Issuance
of common stock for
cash at $ .10 per share
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470,000 | 470 | 46,530 | 47,000 | |||||||||
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Net
loss for the period
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- | - | - | (14,393) | (14,393) | ||||||||
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Balance,
November 30, 2007
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2,870,000 | 2,870 | 68,130 | (14,393) | 56,607 | ||||||||
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Net
loss for the period
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- | - | - | (41,274) | (41,274) | ||||||||
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Balance,
May 31, 2008
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2,870,000 | $ | 2,870 | $ | 68,130 | $ | (55,667) | $ | 15,333 | ||||
See
accompanying notes to financial statements.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
Six
months ended May 31, 2008
Period
from June 29, 2007 (Inception) to May 31, 2008
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Six
months
ended May 31, 2008
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Period
from June 29, 2007 (Inception) to May
31, 2008
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CASH
FLOWS FROM OPERATING ACTIVITIES
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Net
loss
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$ | (41,274) | $ | (55,667) | |
| Change in non-cash working capital items | |||||
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Prepaid
expenses
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(6,667) | (6,667) | |||
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Accounts
payable and accrued liabilities
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5,252 | 9,252 | |||
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CASH
FLOWS USED IN OPERATING ACTIVITIES
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(42,689) | (53,082) | |||
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CASH
FLOWS USED IN INVESTING ACTIVITIES
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-0- | -0- | |||
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CASH
FLOWS FROM FINANCING ACTIVITIES
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Proceeds
from sales of common stock
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-0- | 71,000 | |||
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NET
INCREASE (DECREASE) IN CASH
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(42,689) | 17,918 | |||
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Cash,
beginning of period
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60,607 | -0- | |||
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Cash,
end of period
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$ | 17,918 | $ | 17,918 | |
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SUPPLEMENTAL
CASH FLOW INFORMATION
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Interest
paid
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$ | - | $ | - | |
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Income
taxes paid
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$ | - | $ | - | |
See
accompanying notes to financial statements.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
May
31, 2008
NOTE
1 - BASIS OF PRESENTATION
The
accompanying unaudited interim financial statements of Hammer Handle Enterprises
Inc. have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and
Exchange Commission (“SEC”), and should be read in conjunction with the audited
financial statements and notes thereto contained in the Company’s registration
statement filed with the SEC on Form SB-2. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year 2007 as reported in Form SB-2, have been
omitted.
NOTE
2 – SUMMARY OF ACCOUNTING POLICIES
Nature
of Business
Hammer
Handle Enterprises Inc. (“Hammer Handle”) was incorporated in Nevada on June 29,
2007. Hammer Handle is an exploration stage company and has not yet
realized any revenues from its planned operations.
On
November 15, 2007, the Company completed its acquisition of a 100% interest in
the “Pinto” mineral claims which is comprised of three contiguous British
Columbia mineral tenures occupying an aggregate of 230 hectares or 569 acres of
land. The claims are located near Grand Forks, British
Columbia.
Cash
and Cash Equivalents
For
the purposes of presenting cash flows, Hammer Handle considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents. The
carrying amount of these financial instruments approximates fair value due
either to length of maturity or interest rates that approximate prevailing
market rates unless otherwise disclosed in these financial
statements.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
May
31, 2008
Mineral
Properties
Cost
of license acquisition, exploration and carrying and retaining unproven mineral
lease properties are expensed as incurred. Costs of acquisition are
capitalized subject to impairment testing, in accordance with SFAS 144 “
Accounting for the Impairment of Long-Lived Assets”, when facts and
circumstances indicate impairment may exist.
Comprehensive
Income
The
Company has adopted SFAS 130 “Reporting Comprehensive Income” which establishes
standards for reporting and display of comprehensive income, its components and
accumulated balances. When applicable, the Company would disclose
this information on its Statement of Stockholders’
Equity. Comprehensive income comprises equity except those resulting
from investments by owners and distributions to owners. The Company
has not had any significant transactions that are required to be reported in
other comprehensive income.
Income
Tax
Hammer
Handle follows SFAS 109, “Accounting for Income Taxes.” Deferred income taxes
reflect the net effect of (a) temporary difference between carrying amounts of
assets and liabilities for financial purposes and the amounts used for income
tax reporting purposes, and (b) net operating loss carry-forward. No
net provision for refundable Federal income tax has been made in the
accompanying statement of loss because no recoverable taxes were paid
previously. Similarly, no deferred tax asset attributable to the net operating
loss carry-forward has been recognized, as it is not deemed likely to be
realized.
Use
of Estimates
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 the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Basic
loss per share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
May
31, 2008
Recent
accounting pronouncements
Hammer
Handle does not expect the adoption of recently issued accounting pronouncements
to have a significant impact on the Company’s results of operations, financial
position or cash flow.
NOTE
3 - GOING CONCERN
Hammer
Handle has recurring losses and has a deficit accumulated during the exploration
stage of $55,667 as of May 31, 2008. Hammer Handle's financial
statements are prepared using the generally accepted accounting principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. However,
Hammer Handle has no current source of revenue. Without realization of
additional capital, it would be unlikely for Hammer Handle to continue as a
going concern. Hammer Handle 's management plans on raising cash from
public or private debt or equity financing, on an as needed basis and in the
longer term, revenues from the acquisition, exploration and development of
mineral interests, if found. Hammer Handle's ability to continue as a
going concern is dependent on these additional cash financings, and, ultimately,
upon achieving profitable operations through the development of mineral
interests.
NOTE
4 – INCOME TAXES
For
the period ended May 31, 2008, Hammer Handle has incurred net losses and,
therefore, has no tax liability. The net deferred tax asset generated
by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is approximately $55,700 at May 31, 2008, and will
begin to expire in the year 2027.
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
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2008
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Deferred
tax asset attributable to:
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Net
operating loss carryover
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$ | 18,940 |
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Valuation
allowance
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(18,940) | |
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Net
deferred tax asset
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$ | - |
HAMMER
HANDLE ENTERPRISES INC.
(A
EXPLORATION STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
May
31, 2008
NOTE 5 –
COMMON STOCK
At
inception, Hammer Handle issued 2,400,000 shares of stock for $24,000
cash.
During
the period ended November 2007, Hammer Handle issued 470,000 shares of stock for
$47,000
cash.
NOTE 6 –
COMMITMENTS
Hammer
Handle neither owns nor leases any real or personal property, an officer has
provided office services without charge. Such costs are immaterial to
the financial statements and accordingly are not reflected
herein. The officers and directors are involved in other business
activities and most likely will become involved in other business activities in
the future.
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will
continue,” “will likely result,” and similar expressions. We intend
such forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and are including this statement for purposes of complying with
those safe-harbor provisions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks and uncertainties
which may cause actual results to differ materially from the forward-looking
statements. Our ability to predict results or the actual effect of future plans
or strategies is inherently uncertain. Factors which could have a
material adverse affect on our operations and future prospects on a consolidated
basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and
uncertainties should also be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
Overview
We were
incorporated in the State of Nevada on June 29, 2007 (date of incorporation). We
are an exploration-stage company engaged in the exploration of mineral resource
properties. On October 17, 2007 we acquired the Pinto Project (the “Property” or
the “Project” or the “Pinto Property”), a series of properties and their
associated mineral claims in British Columbia.
The
Property is located in South Central British Columbia, Canada, approximately 62
kilometers north of Grand Forks, B.C. at roughly (49°35'26" N. Latitude;
118°21'40" W. Longitude). Property access is possible by paved Provincial
Highway and well maintained gravel Forest Service Roads.
The
Property is 100% owned by Hammer Handle Enterprises Inc. and is comprised of 3
contiguous British Columbia Government's Mineral Tenure Staking On-Line System
(“MTO”) issued mineral claims (Tenure #529410, #553574 and #553575) occupying a
total of 230.3556 hectares (569.221 acres). The mineral claims are in good
standing with respect to the British
Columbia
Mineral Tenure Act through March 4, 2008 (#529410) and March 5, 2008 (#553574
and #553575), respectively.
We own
100% interest in the land covered by our mineral claims. Currently, we are not
aware of any native land claims that might affect the title to the mineral
claims or the property. Although we are unaware of any situation that would
threaten these claims, it is possible that a native land claim could be made in
the future. The federal and provincial government policy at this time is to
consult with all potentially affected native bands and other stakeholders in the
area of any potential commercial production. If we should encounter a situation
where a native person or group asserts an interest in these claims, we may
choose to provide compensation to the affected party in order to continue with
our exploration work, or if such an option is not available, we may have to
relinquish any interest that we hold in these claims.
Plan
of Operation
Our plan
of operation is to conduct exploration work on the claims in order to ascertain
whether they possess commercially exploitable mineral deposits. There can be no
assurance that such deposits exist on these properties.
Even if
we complete our proposed exploration programs on the properties and we are
successful in finding a deposit, we may not find enough to pay our expenses or
achieve profitable operations.
Recommended
Program of Preliminary Exploration
Mineral
property exploration is typically conducted in phases. Each subsequent phase of
exploration work is recommended by a geologist based on the results from the
most recent phase of exploration. We have not yet commenced the preliminary
phase of exploration on our property. Once we complete the preliminary phase, we
will make a decision as to whether or not we will proceed with further
exploration based upon the analysis of the results of that program. Our sole
director will make these decisions based upon the recommendations of an
independent geologist who will oversee the program and record the
results.
In
connection with our plan of operation, our consulting geologist has recommended
the following:
Before
any substantive field work and/or mineral exploration programs are mounted on
the Pinto Project, a site visit and Property Inspection program should be
initiated. A qualified person (as per Canadian National Instrument 43-10 1
definitions) should be mobilized to the Project for this Property Inspection and
historical sampling verification sampling program. A Technical Report should be
subsequently authored based on this report and that property
inspection.
Preceding
or concurrent with the Property Inspection program, a detailed compilation of
all exploration data available on the Franklin Mining Camp and the Pinto
Property itself should be undertaken. The data should be digitized into a
useable form such as a GIS package.
While
this compilation has begun, to some extent, with the authoring of this report,
there is a great deal of information which remains to be compiled from various
published sources (as well as additional unpublished sources). In particular, a
more coherent database of the lithological units on the project should be
compiled into a useable geological package complete with legend as well as all
available structural data. A coherent compilation of all germane data in the
Franklin Camp would greatly aid future exploration work on the Pinto
Project.
The
Victoria B.C.G.S. Library should be visited and its facility utilized for this
compilation project with specific attention paid to the Property Files available
through the Franklin Camp MINFILEs.
Unfortunately,
the most prospective areas immediate to Pinto Property are held under
alternative ownership. The author recommends that close attention be paid to the
mineral titles ownership of the surrounding areas. The ground to the south, west
and north of the Project would benefit greatly if brought under a single
ownership umbrella.
After the
described desk study, data compilation program, and site inspection compliant
report are completed, it is recommended that the Pinto Project should be
explored by a staggered series of work programs designed to achieve the
following exploration objectives:
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Re-establish
Property geological control (outcrop mapping) by prospecting and GPS
surveys;
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§
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Systematic
sampling of all bedrock exposures defined from the
above;
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§
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Alteration
mapping project;
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§
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Geochemical
soil sampling within (verification) and beyond the limits of historic
work;
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Airborne
geophysical survey;
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Geophysical
assessment (I.P.) of the property following on the geochemical
survey;
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Trenching
and open cut exploration and sampling (following up on defined geochemical
and geophysical anomalies);
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Definition
of drill targets and testing by diamond
drilling.
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Additionally,
our consulting geologist recommends environmental and socio-economic programs
are undertaken contemporaneously to any exploration programs. These studies
should focus on:
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Environmental
baseline studies including water sampling and ARD/ABA testing of
mineralization and host rock;
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§
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Identification
and preliminary contact with the local First
Nations;
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§
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Identification
and preliminary contact with the surface rights holders toward existing
access road use and working
agreements;
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§
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Identification
and preliminary contact with local conservation groups and
communities.
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Our
consulting geologist’s recommended phased exploration program is summarized
below:
PHASE
I:
1. Phase I: QP Property
Inspection and Technical Report Generation: A 2-day site visit conducted
by a Q.P. Samples should be collected and assayed with a view towards confirming
historically reported assay values. In specific, the open cut, adits, and old
workings should be visited and sampled. Effort should be made to re-establish
any historic grid locations and/or sample sites. Access and up-to-date Property
conditions should also be gained. The Q.P. should then author a Technical Report
based on this inspection and sample program/assays. A program budget of C$8,000
and duration of l month (allowing for the site visit, assay turnaround and
report generation) are required for this phase, which could be done anytime
between May and November. No work permits would be required for this phase of
work.
PHASE
II:
2. Phase II: Systematic and
Detailed Franklin Camp Data Compilation and Digitization: A geologist
adept at GIS compilation should be employed to catalogue and digitize all
available information on the Franklin camp and Pinto Projects. This data should
be assembled into a single coherent GIS package which could be utilized to guide
all future work on the Project. In particular, a detailed geological basemap
(including robust lithological catalogues and associated structural data) should
be produced from this exercise. In addition, the geologist should garner a clear
understanding of the identified mineralization within the Franklin Camp and
apply that knowledge to exploration planning on the Pinto Property. A program
budget of C$3,000 and duration of 6 days are required for this phase, which
could be done anytime. No work permits would be required for this phase of
work.
PHASE
III:
3. Phase IIIA: Prospecting and
Assessment of Pinto Property: A 2-week reconnaissance prospecting program
would be undertaken by two locally experienced prospectors over the Pinto
Property. The existing 1:20,000 scale basemap (and 1:5,000 scale blowups
thereof) for the Pinto Property should be adequate for this program (the
1:20,000 scale N.T.S. 082E.059 map sheet); alternatively, digital TRIM
topography Data is available in digital format for purchase for approximately
C$1,000 and could be enlarged for this purpose. The program would focus on
bedrock exposure location (GPS Survey) and systematic sampling as well as a
preliminary soil sampling program in the defined anomalous areas of the project
(all with subsequent assaying). A program budget of C$28,000 and duration of 2
weeks are required for this phase, which could be done anytime between May and
November. No work permits would be required for this phase of work.
4. Phase IIIB: Grid-based
Geochemical Survey: A GPS surveyed, flagged exploration grid would be
established over the Pinto Property covering an area of approximately 0.8
kilometers2 (the
southeastern portion of the claims). The minimum line spacing for the grid
should be 100 meters, with a minimum of 10,900 meter north-south lines over the
area east of Gloucester Creek and centered on Pinto Creek. A total of 9 line
kilometers (minimum) would be required for this program. Soil geochemistry (C
soil horizon focus) should be sampled on 50 meter centers; for a total of
approximately 200 samples. This would require three weeks for two prospectors to
establish and sample the grid; Geological and structural mapping of the grid by
a
geologist
should also be conducted during this program, along with rock grab and
representative chip sampling of any significant mineral occurrences discovered.
A program budget of C$35,000 would be necessary for this phase and could be
conducted between May and November. Phase IIIA prospecting could easily be
combined with this Phase for economies of scale. No work permits would be
required for this phase of work.
5. Phase IIIC: Geophysical
Survey: An Induced Polarization (J.P.) and coincident VLF/EM survey
program would be conducted over the same grid as described above. The program
would be designed to assess the near surface (>200 meters depth)
mineralization potential of the property. The program should take an estimated
10 days to conduct at an approximate cost of C$35,000. Phase II A/B Prospecting and
geochemical surveying could be combined with this Phase easily. A Notice of Work
Permit and reclamation bond will be required to be applied for and authorized by
the B.C. Ministry of Energy, Mines and Petroleum Resources for this program. The
creation and granting of the permit will require an approximate one month window
before the work in conducted. The work could be conducted anytime between May
and November.
6. Phase IIID: Technical Report
and Assessment Work: An NI 43-101 Technical Report should be prepared
after the completion of Phase III. This would take approximately one month to
complete and cost an estimated C$15,000. Additionally, a report should be
prepared and filed with the Provincial Government to apply the Phase I expenses
to the Pinto Property (estimated cost of report and filings,
C$2,500).
PHASE
IV
7. Phase IVA: Pinto North-West
Prospecting and Grid Expansion: A GPS surveyed flag grid should be
established over the remainder of Pinto Property covering an area of
approximately l kilometer2 (the
north and western portion of the claims; east and west of Gloucester Creek). The
line spacing for the grid should again be run at a minimum of 100 meters, with a
minimum of eight 1,300 meter north-south lines over the area east and west of
Gloucester Creek. A total of 10 line kilometers (minimum) would be required for
this program. Soil geochemistry (B or C soil horizon focus) should be sampled on
50 meter centers; for a total of approximately 250 samples. This would require
three weeks for two prospectors to establish and sample the grid. Geological and
structural mapping of the grid by a geologist should also be conducted during
this program, along with rock grab and representative chip sampling of any
significant mineral occurrences discovered. This grid should then be run with an
IP Program as in Phase IIIC. A program budget of C$100,000 would be necessary
for this phase and could be conducted between May and November; A Notice of Work
Permit Update (amendment) and additional reclamation bond will be required to be
applied for and authorized by the B.C. Ministry of Energy, Mines and Petroleum
Resources for this program.
8. Phase IVB: Mechanical
Trenching/Diamond Drilling: Should prior phase results warrant, a
mechanical trenching and or diamond drilling program should be conducted to test
the defined anomalies for more detailed assessment. A new (or amended) Notice of
Work application to the B.C. Ministry of Energy, Mines and Petroleum Resources
would be required as well as an increase of the reclamation bonding for this
program. The estimated budget for a trenching
and/or
Diamond Drilling program would be C$250,000 and take a total of three months to
complete. Updated technical reports should follow on the completion of Phase II,
(another C$15,000).
Proposed
Budget
The
aforementioned recommendations are expanded into a proposed budget for such
activities below:
PHASE
I
Property
Inspection / Technical Report Generation
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|
|
Property
Inspection
|
QP
Consultant
|
3
days
|
C$650/day
|
C$ | 1,950 |
|
Technical
Report
|
QP
Consultant
|
9
days
|
Assays/Writing
|
C$ | 5,850 |
|
Total
with Contingency
|
Including
work from this report
|
C$ | 8,000 | ||
PHASE
II
Franklin
Camp Data GIS Compilation
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|
|
Research
|
Consultant
|
2
days
|
C$500/day
|
C$ | 1,000 |
|
GIS
Database
|
Consultant
|
4
days
|
C$500/day
|
C$ | 2,000 |
|
Total
with Contingency
|
Including
work from this report
|
C$ | 3,000 | ||
PHASE
III
Property
Exploration - PHASE III A
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Base
Map Preparation
|
Consultant
|
1
day
|
C$ | 1,000 | C $ | 1,000 | |
|
Prospect/Sampling
|
2
Prospectors
|
28
man days
|
C$ |
300/man
day
|
C$ | 8,400 | |
|
Geological
Control
|
Geologist
|
5
days
|
C$ |
650/man
day
|
C$ | 3,250 | |
|
Expenses
|
Truck,
hotel, food
|
30
days
|
C$ |
180/day
|
C$ | 5,400 | |
|
Supplies
|
Sampling
Gear
|
C$ | 1,000 | C$ | 1,000 | ||
|
Analyses
|
Rock
/ Soil
|
200
samples
|
C$ |
25/sample
|
C$ | 5,000 | |
|
Compilation
|
Consultant
|
2
days
|
C$ |
650/day
|
C$ | 1,300 | |
|
Total
with Contingency
|
C$ | 28,000 | |||||
Pinto
Grid Geochemistry - PHASE III B
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Prospecting
|
2
Prospectors
|
38
man days
|
C$ |
300/man
day
|
C$ | 11,400 | |
|
Geology
Control
|
1Geologist
|
6
days
|
C$ |
650/day
|
C$ | 3,900 | |
|
Expenses
|
Truck,
hotel, food
|
40
man days
|
C$ |
180/day
|
C$ | 7,200 | |
|
Analyses
|
Soils,
Rocks
|
250
samples
|
C$ |
25/sample
|
C$ | 6,250 | |
|
Supplies
|
Sampling
Gear
|
C$ | 2,000 | C$ | 2,000 | ||
|
Compilation
|
Consultant
|
2
days
|
C$ |
650/day
|
C$ | 1,300 | |
|
Total
with Contingency
|
C$ | 35,000 | |||||
Pinto
Grid Geophysics - Phase III C
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Notice
of Work
|
Consultant
|
1day
|
C$ |
700/day
|
C$ | 700 | |
|
Bond
to MEMPR
|
Reclamation
|
1 | C$ | 2,000 | C$ | 2,000 | |
|
I.P.
/ VLF-EM
|
Consultant
|
10
days
|
C$ |
1,750/linekm
|
C$ | 28,000 | |
|
Consultant
Support
|
Prospector
|
10
days
|
C$ |
300/day
|
C$ | 3,000 | |
|
Total
with Contingency
|
C | 35,000 | |||||
Technical
Report - Phase III D
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|
|
Technical
Report
|
Geologist
|
25
days
|
C$600/day
|
C$ | 15,000 |
|
Totals
|
C$ | 15,000 | |||
PHASE
IV
Pinto NW
Grid Geochemistry and Geophysics - PHASE IV A
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Prospecting
|
2
Prospectors
|
64
man days
|
C$ |
300/man
day
|
C$ | 19,200 | |
|
Geology
Control
|
1
Geologist
|
10
days
|
C$ |
650/day
|
C$ | 6,500 | |
|
Expenses
|
Truck,
hotel, food
|
70
man days
|
C$ |
180/day
|
C$ | 12,600 | |
|
Analyses
|
Soils,
Rocks
|
350
samples
|
C$ |
25/sample
|
C$ | 8,750 | |
|
Supplies
|
Sampling
Gear
|
C$ | 2,000 | C$ | 2,000 | ||
|
Compilation
|
Consultant
|
2
days
|
C$ |
650/day
|
C$ | 1,300 | |
|
Notice
of Work Update
|
Consultant
|
1
day
|
C$ |
700/day
|
C$ | 700 | |
|
Bond
to MEMPR
|
Reclamation
|
1 | C$ | 1,000 | C$ | 1,000 | |
|
I.P.
/ VLF-EM
|
Consultant
|
10
days
|
C$ |
1,750/linekm
|
C$ | 38,000 | |
|
Consultant
Support
|
Prospector
|
10
days
|
C$ |
300/day
|
C$ | 3,000 | |
|
Total
with Contingency
|
C$ | 100,000 | |||||
Trenching
and Diamond Drilling – Phase IV B
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Notice
of Work
|
Consultant
|
2
days
|
C$ |
700/day
|
C$ | 1,400 | |
|
Bond
to MEMPR
|
Reclamation
|
Trench/Drill
|
C$ | 10,000 | |||
|
Road
Construction
|
Estimate
|
5
kilometers
|
C$ | 100,000 | |||
|
Trenching
|
Contractor
|
10
days
|
C$ |
1,000/day
|
C$ | 10,000 | |
|
Diamond
Drilling
|
Contractor
|
1500
meters
|
C$ |
100/metre
|
C$ | 150,000 | |
|
Geology,
Log Core
|
Geologist
|
30
days
|
C$ |
700/day
|
C$ | 21,000 | |
|
Core
Splitter
|
Labor
|
30
days
|
C$ |
250/day
|
C$ | 7,500 | |
|
Expenses
|
Truck/hotel/food
|
30
days
|
C$ |
250/day
|
C$ | 7,500 | |
|
Analyses
|
Rocks,
Core
|
300
samples
|
C$ |
25/sample
|
C$ | 7,500 | |
|
Compilation
|
Geologist
|
6
days
|
C$ |
700/day
|
C$ | 4,200 | |
|
Total
with Contingency
|
C$ | 350,000 | |||||
Technical
Report - Phase IV C
|
Work
|
Notes
|
Number
|
Cost
|
Work
Cost
|
|||
|
Technical
Report
|
Geologist
|
28
days
|
C$ |
700/day
|
C$ | 19,600 | |
|
Totals
|
C$ | 19,600 | |||||
Our
Exploration Program in the Next 12 Months
We intend
to proceed with a preliminary exploration program as recommended by our
Consulting Geologist. Once complete, the recommended preliminary geological
exploration program (consisting of Phases I, II, and III) will cost
approximately C$124,000. If the preliminary program is successful, our
Consulting Geologist recommends a C$500,000 drill program to further explore the
Pinto Property. We had $15,333 in working capital as of May 31, 2008.
Accordingly, we are able to begin but not complete the preliminary exploration
program without additional financing. We plan to raise up to $200,000 of
additional capital during the next 12 to 18 months by seeking additional funds
from existing investors or by offering equity securities to new investors in
order to complete our preliminary exploration program. The risky nature of this
enterprise and lack of tangible assets other than the Property places other
types of debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated.
Once we
receive the analysis of each Phase of our exploration program, our board of
directors, in consultation with our consulting geologist will assess whether to
proceed with additional Phases of exploration. In making this determination to
proceed with a further exploration program, we will make an assessment as to
whether the results of each Phase of the exploration program are sufficiently
positive to enable us to proceed. This assessment will include an evaluation of
our
cash
reserves after the completion of each exploration Phase, the price of minerals,
and the market for the financing of mineral exploration projects at the time of
our assessment.
In the
event the results of our initial exploration program prove not to be
sufficiently positive to proceed with further exploration on the Pinto Mineral
Claims, we intend to seek out and acquire interests in other North American
mineral exploration properties, which, in the opinion of our consulting
geologist, offer attractive mineral exploration opportunities. If we are unable
to locate and acquire such prospects, we may be forced to seek other business
opportunities. Presently, we have not given any consideration to the acquisition
of other exploration properties because we have only recently commenced our
preliminary exploration program and have not received any results.
Upon the
completion of preliminary Phases of exploration, or any additional Phases, which
are successful in identifying mineral deposits, we will have to spend
substantial funds on further exploration and engineering studies before we know
that we have a mineral reserve. A mineral reserve is a commercially viable
mineral deposit.
Results
of Operations for the three and six months ended May 31, 2008 and period from
inception to May 31, 2008
We did
not earn any revenues from our inception (June 29, 2007) through the period
ending May 31, 2008. We do not anticipate earning revenues unless and until such
time that we enter into commercial production of the Pinto Mineral Claims, or
other mineral claims we may acquire and develop. We are presently in the
exploration stage of our business and we can provide no assurance that we will
discover commercially exploitable levels of mineral resources on the Pinto
Mineral Claims, or if such resources are discovered, that we will enter into
commercial production.
We
incurred operating expenses in the amount of $23,429 for the three months ended
May 31, 2008, $41,274 for the six months ended May 31, 2008, and $55,667 from
our inception on June 29, 2007 to May 31, 2008. The operating expenses for the
three months ended May 31, 2008 included professional fees in the amount of
$16,782, exploration costs of $3,737, and other costs of $2,910. The operating
expenses for the six months ended May 31, 2008 included professional fees in the
amount of $25,715, exploration costs of $10,047, and other costs of $5,512. The
operating expenses for the period from our inception on June 29, 2007 to May 31,
2008 mainly included professional fees in the amount of $29,715, exploration
expenses in the amount of $18,547, and other expenses in the amount of 6,713.
The professional fees consist of legal fees and accounting fees.
We
anticipate our operating expenses will increase as we undertake our plan of
operations. The increase will be attributable to undertaking the additional
phases of our geological exploration program and the professional fees
associated with our becoming a reporting company under the Securities Exchange
Act of 1934.
We
incurred a net loss in the amount of $23,429 for the three months ended May 31,
2008, $41,274 for the six months ended May 31, 2008, and $55,667from our
inception on June 29, 2007 to May 31, 2008.
Liquidity
and Capital Resources
As at May
31, 2008, we had $9,252 in current liabilities. Our financial statements report
a net loss of $55,667 for the period from June 29, 2007 (date of inception) to
May 31, 2008. Our net loss is primarily due to exploration costs expended in
pursuit of our business plan. On May 31, 2008, we had working capital of
$15,333. Our plan is to raise equity financing in the amount of $200,000 during
the next 12 months. There can be no assurance that we will be able to raise this
money. We anticipate that this money, if raised, will be enough to cover the
budgeted expenditures for the next twelve months. Any remaining monies will be
carried forward to complete additional exploration.
Off
Balance Sheet Arrangements
As of May
31, 2008, there were no off balance sheet arrangements.
Purchase
of Significant Equipment
We do not
intend to purchase any significant equipment over the next twelve
months.
Employees
Currently
our only employee is our sole director and officer. We do not expect any
material changes in the number of employees over the next 12 month period. We do
and will continue to outsource and contract for employment as
needed.
Going
Concern
We have
recurring losses and have a deficit accumulated during the exploration stage of
$55,667 as of May 31, 2008. Our financial statements are prepared
using the generally accepted accounting principles applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, we have no
current source of revenue. Without realization of additional capital, it would
be unlikely for us to continue as a going concern. Our management
plans on raising cash from public or private debt or equity financing, on an as
needed basis and in the longer term, revenues from the acquisition, exploration
and development of mineral interests, if found. Our ability to
continue as a going concern is dependent on these additional cash financings,
and, ultimately, upon achieving profitable operations through the development of
mineral interests.
Critical
Accounting Policies
In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis. The SEC indicated
that a “critical accounting policy” is one which is both important to the
portrayal of a company’s financial condition and results, and requires
management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. We believe that the following accounting policies fit this
definition.
Comprehensive
Income
We have
adopted SFAS 130 “Reporting Comprehensive Income”, which establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. When applicable, we would disclose this information on its
Statement of Stockholders’ Equity. Comprehensive income comprises equity except
those resulting from investments by owners and distributions to owners. We have
not had any significant transactions that are required to be reported in other
comprehensive income.
Income
Tax
We follow
SFAS 109, “Accounting for Income Taxes.” Deferred income taxes reflect the net
effect of (a) temporary difference between carrying amounts of assets and
liabilities for financial purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carryforwards. No net provision for
refundable Federal income tax has been made in the accompanying statement of
loss because no recoverable taxes were paid previously. Similarly, no deferred
tax asset attributable to the net operating loss carryforward has been
recognized, as it is not deemed likely to be realized.
New
Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosure about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurement, the FASB having previously
concluded in those accounting pronouncements that fair value is the relevant
measurement attribute. This statement does not require any new fair value
measurements. However, for some entities, the application of the statement will
change current practice. This statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. The Company is currently reviewing the effect, if
any, that this new pronouncement will have on its financial
statements.
There
were various other accounting standards and interpretations issued during 2006
or to November 30, 2007, none of which are expected to have a material impact on
the Company's financial position, operations or cash flows.
A smaller
reporting company is not required to provide the information required by this
Item.
We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of May 31, 2008. This evaluation was
carried out under the supervision and with the participation of our
Chief
Executive Officer and our Chief Financial Officer, David Price. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of May 31, 2008, our disclosure controls and procedures are
effective. There have been no changes in our internal controls over
financial reporting during the quarter ended May 31, 2008.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Limitations on the
Effectiveness of Internal Controls
Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.
PART
II – OTHER INFORMATION
We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
A smaller
reporting company is not required to provide the information required by this
Item.
None
None
No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarterly period ended May 31,
2008.
None
|
Exhibit
Number
|
Description
of Exhibit
|
SIGNATURES
In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Hammer
Handle Enterprises, Inc.
|
|
|
Date:
|
July
10, 2008
|
|
By: /s/David
Price
David
Price
Title: Chief Executive
Officer and
Director
|