Note 1 – Nature of Business, Presentation, and Going Concern
Organization
Dolat Ventures, Inc., the “Company” was incorporated in Nevada on April 13, 2006 with the intent to engage in the business of mineral property exploration.
On February 9, 2009, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Dove Diamond and Mining, Inc. (“Dove”), a Nevada corporation, and the shareholders of Dove (“Dove Shareholders”) whereby the Company acquired 100% of the issued and outstanding common stock of Dove in exchange (the “Stock Exchange”) for 20,622,000 newly issued shares of its restricted common stock. The final closing was concluded and is effective February 15, 2009. For accounting purposes, the Stock Exchange is being accounted for as if Dove is considered a newly created entity. Dove will import and wholesale rough diamonds and gemstones.
In conjunction with the acquisition of Dove, the Company experienced a change in control. On February 28, 2009 Shmuel Dovid Hauck was nominated and elected by the Board of Directors as President of Dolat Ventures, Inc. upon the resignation of Gary Tice, who previously served as President, Chief Financial Officer, Secretary, and a Director. Mr. Hauck was also appointed to the Board of Directors on February 28, 2009.
On April 13, 2010, the Company entered into a Share Exchange Agreement with Millennium Mining LLC (“Millennium”), a Sierra Leone Limited Liability Company. Under the agreement, the company acquired 75% of the capital stock of Millennium in exchange for thirty million (28,000,000) shares of the Company’s common stock. The shares of stock acquired were owned by Mr. Shumel Dovid Hauck, the Company’s President and majority shareholder. Millennium is an operating entity in the business of mining and wholesale distribution of diamonds and precious gemstones.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”).
Going Concern
The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $11,657,285 at November 30, 2012, a net loss of $82,449 for the Nine Months ended November 30, 2012, as compared to a net loss of $110,610 for the same three month period ending November 30, 2011. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company’s to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital. No assurance can be given that the Company will be successful in these efforts.
The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in the accompanying consolidated financial statements include the depreciable lives of property and equipment, valuation of share-based payments and the valuation allowance on deferred tax assets. Actual results could differ from those estimates and would impact future results of operations and cash flows.
Principles of Consolidation
The consolidated financial statements include the accounts of Dolat Ventures, Inc., its wholly-owned subsidiary, Dove Diamond and Mining, Inc., and its majority-owned subsidiary, Millennium Mining LLC. All significant inter-company balances and transactions have been eliminated in consolidation.
Reclassifications
Certain items on the 2010 statement of operations, and statement of cash flows have been reclassified to conform to the current period presentation.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents. At Nov. 30, 2012 and Nov. 30, 2011, respectively, the Company had no cash equivalents.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of 10 years. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.
Depreciation expense for the nine months ended Nov 30, 2012 was $174,332.
Mineral Property and Exploration Costs
The Company has been in the exploration stage since April 13, 2006 and has not yet realized sustainable revenues from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mining properties and the wholesale distribution and sale of diamonds and precious gemstones. In accordance with Securities and Exchange Commission Industry Guide 7, mineral property acquisition costs and exploration costs are expensed to operations as incurred.
When it has been determined that a mineral property can be economically developed as a result of establishing probable and then proven reserves, the costs then incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable-proven reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Impairment or Disposal of Long-Lived Assets
The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset August not be recoverable. When necessary, impaired assets are written down to estimate fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 states that a fair value measurement should be determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, ASC 820 specifies a hierarchy of valuation techniques based on whether the types of valuation information (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The twelve broad levels defined by ASC 820 hierarchy are as follows:
Level 1 – quoted prices for identical assets or liabilities in active markets.
Level 2 – pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.
Level 3 – valuations derived from methods in which one or more significant inputs or significant value drivers are unobservable in the markets.
These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions August also dramatically affect the estimated fair values.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of November 30, 2012. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include related party receivables, prepaid expenses, accounts payable and accrued expenses and related party payables. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
Revenue Recognition
The Company recognized revenue on arrangements in accordance with ASC Topic 605,
“Revenue Recognition”
(“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. Revenue is recognized when the products are received and accepted by the customer.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.
Stock Based Compensation
The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50 “Equity-Based Payments to Non-Employees” ("ASC 505-50"). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options issued to non-employees are recorded in expense and additional paid-in capital in shareholders' equity/(deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each period.
The Company has not adopted a stock option plan and has not granted any stock options as of November 30, 2012.
Income Taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized.
The FASB has issued ASC 740 “Income Taxes” (formerly, Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” – An Interpretation of FASB Statement No. 109 (FIN 48)). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of February 29, 2012.
Foreign Currency Translation
The consolidated financial statements are presented in United States dollars. In accordance with ASC 828 ‘‘Foreign Currency Matters’’, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations. Translation adjustments are included in Accumulated Other Comprehensive Income (Loss).
Basic and Diluted Loss Per Share
The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Dilutive loss per share has not been presented because as of February 28, 2011 and 2010, respectively, there were no common share equivalents outstanding.
Segment Information
In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company operates in only one operating segment as of February 29, 2012.
Exploration Stage Company
The Company is an “exploration stage company” as defined in the Securities and Exchange Commission Industry Guide 7, and is subject to compliance with ASC Topic 915 “Development Stage Entities”. To date, the Company's planned principal operations have not fully commenced.
Accounting Standards Codification
In September 2009, the Financial Accounting Standards Board (“FASB”) issued ASC 105, formerly FASB Statement No. 168, the FASB Accounting Standards Codification (“Codification”) and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”), a replacement of FASB Statement No. 162 (“SFAS 168”). SFAS 168 establishes the Codification as the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the SEC. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes instead two levels of guidance — authoritative and non-authoritative. All non-grandfathered, non-SEC accounting literature that is not included in the Codification will become non-authoritative. The FASB’s primary goal in developing the Codification is to simplify user access to all authoritative GAAP by providing all the authoritative literature related to a particular accounting topic in one place. The Codification was effective for interim and annual periods ending after September 15, 2009. As the Codification was not intended to change or alter existing GAAP, it did not have a material impact on the Company’s consolidated financial statements.
Effect of Recent Accounting Pronouncements
The Company reviews new accounting standards as issued. No new standards had any material effect on these consolidated financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to May 31, 2012 through the date these financial statements were issued.
Note 3 – Mineral Properties
Paula Property, British Columbia, Canada
On October 3, 2006, the Company acquired a 100% undivided right, title and interest in and to the ‘‘Paula Property’’ located in the province of British Columbia, Canada from an unrelated party for $1,000. From that time through February 28, 2010, the Company has incurred property acquisition and exploration costs totaling $10,771 on the Paula Property. During the year ended February 28, 2010, the Company has decided to abandon the Paula Property to focus on its operations acquired in Sierra Leone.
Bo District, Sierra Leone
On April 13, 2010, the Company acquired 75% of the capital stock of Millennium Mining LLC (“Millennium”). Millennium was incorporated in Sierra Leone as a Private Limited Liability Company on March 3, 2008 and commenced commercial operations after obtaining its license from the Ministry of Mineral Resources (Sierra Leone) shortly after. The Company’s core operations are to mine, extract, refine, and purify precious metals and stones. The Company buys, sells, distributes and exports diamond bauxite, rutile gold, silver and other precious minerals in Sierra Leone and internationally.
Millennium is party to a mining agreement pursuant to which owners of land in the towns of Gandorhun and Njala in the Tikonko Chiefdom, Bo District of Sierra Leone have agreed to allow Millennium to mine the area in and around the Baimbawai Pool of the Sewa River located between those two towns. According to the terms of the mining agreement dated January 26, 2008, Millennium will fund all diamond mining operations, and shall be responsible for all required machinery, mining equipment and/or structures. The landowners who hold the license to mine this area shall be entitled to thirty percent (28%) of the net profits.
Note 4 – Notes Payable
The Company issued twelve notes payable as follows: Note One is a non-interest bearing loan in the amount of $17,113 (74,441,165 Sierra Leones) disbursed to the Company on multiple dates between March 15, 2008 and August 5, 2009. All amounts were payable February 1, 2009. Note Two is a non-interest bearing loan in the amount of $18,391 (80,000,000 Sierra Leones) obtained on March 28, 2008 and payable June 28, 2008. Note Twelve is a non-interest bearing loan secured by a motor vehicle in the amount of $3,218 (14,000,000 Sierra Leones) obtained on February 24, 2009 and due on demand. All twelve notes are in default at February 28, 2011.
During the year ended February 28, 2010, one of the Company’s banks credited their overdraft balance by $34,070 (140,000,000 Sierra Leones) and created a Bank Loan for this amount. During the twelve months ended February 28, 2011, $15,296 (58,333,333 Sierra Leones) was paid on the loan leaving a balance of $18,774 (81,666,667 Sierra Leones). This loan accrues interest monthly which is automatically charged to the bank account. Interest expense of $602 was paid during the twelve months ended February 28, 2011.
On March 28, 2011, the Company issued a short-term note payable in the amount of $100,000. The note is non-interest bearing and is due January 28, 2012.
Note 5 – Related Party Transactions
As of February 28, 2009 the Company had received $24,660 from associates of the Company’s management. These advances were unsecured and non-interest bearing. During the year ended February 28, 2010 the Company received an additional $7,022 from Company’s management, and $25,247 of this debt was forgiven and credited to additional paid in capital, resulting in a balance of $6,435 due to related parties as of February 28, 2010 and February 28, 2011.
On February 9, 2009, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Dove Diamond and Mining, Inc. (“Dove”), a Nevada corporation, and the shareholders of Dove (“Dove Shareholders”) whereby the Company acquired 100% of the issued and outstanding common stock of Dove in exchange (the “Stock Exchange”) for 20,622,000 newly issued shares of its restricted common stock. The final closing was concluded and is effective February 15, 2009
During the year ended February 28, 2010, Dove advanced $298,000 to a Millennium, which at the time was majority owned by the Company’s President and majority shareholder
.
On April 13, 2010, the Company acquired a 75% interest in Millennium.
On September 29, 2009, Mr. Gary Tice and Ms. Nigar Lila executed a stock Purchase Agreement, pursuant to which Ms. Lila agreed to sell all of her holding in Dolat to Mr. Tice for $250,000. Ms. Lila resigned from the Board of Directors on September 22, 2009 and was replaced by Gary Tice, who was appointed President the same day.
On February 28, 2009 Shmuel Dovid Hauck was nominated and elected by the Board of Directors as President of the Company upon the resignation of Gary Tice, who previously served as President, Chief Financial Officer, Secretary, and a Director. Mr. Hauck was also appointed to the Board of Directors on February 28, 2009.
For the years ended February 28, 2010 and February 28, 2009 the Company paid a total of $220 and $2,500, respectively, to the Company’s sole officer for administrative services rendered to the Company.
On April 13, 2010, the Company entered into a Share Exchange Agreement with Millennium Mining LLC (“Millennium”), a Sierra Leone Limited Liability Company. Under the agreement, the company acquired 75% of the capital stock of Millennium in exchange for thirty million (28,000,000) shares of the Company’s common stock. The shares of stock acquired were owned by Mr. Shmuel Dovid Hauck, the Company’s President and majority shareholder.
On July 21, 2010, the Company issued 1,000,000 shares of its restricted common stock to the brother-in-law of the Company’s President and Director for compensation for past support of the Company.
In September 2012, the Company’s President lent $5,000 at no interest for a term of one year to the Corporation, to pay for administrative expenses.
Note 6 – Stockholders’ Deficit
On June 19, 2006, the Company issued 4,000,000 restricted shares of its common stock for $4,000 cash, or $.001 per share.
On June 26, 2006, the Company issued 1,000,000 restricted shares of its common stock for $1,000 cash, or $.001 per share.
On August 21, 2006, the Company issued 800,000 restricted shares of its common stock for $8,000 cash, or $.01 per share.
On February 1, 2006, the Company issued 800,000 restricted shares of its common stock for $16,000 cash, or $.02 per share.
On February 15, 2009, the Company issued 20,622,000 shares of stock to two individuals in exchange for 100% of the shares of the outstanding capital stock of Dove Diamonds and Mining, Inc.
During the year ended February 28, 2010, the company sold 1,803,279 restricted shares of its common stock for $325,000 or $0.18 per share. The Company incurred $17,500 of expense related to sale of these shares.
On April 13, 2010, the Company issued 28,000,000 shares of common stock in a share exchange agreement for 75% of Millennium Mining LLC common stock.
On July 29, 2010, the Company filed an amendment to its articles of incorporation with the Nevada Secretary of State to increase its authorized number of common shares to 250,000,000 at $0.001 par value and authorized 25,000,000 shares of preferred stock with a par value of $0.001. Also on July 29, 2010, the Board of Directors of the Company filed a Designation of Series A Preferred Stock creating 1,000,000 shares of Series A Preferred Stock and a Designation of Series B Preferred Stock creating 24,000,000 shares of Series B Preferred Stock.
During the year ended February 28, 2010, the Company issued a total of 4,162,223 restricted shares of its common stock for $503,000 cash, or an average of $0.12 per share, under private placements.
During the year ended February 28, 2010, the Company issued 861,000 shares of its restricted common stock to various individuals and entities for services at a value of $126,650, or an average of $0.147 per share, based on the market value at the date of issuance.
During the year ended February 28, 2010, the Company issued 375,000 shares of its restricted common stock to various charitable organizations as donations at a value of $56,250, or an average of $0.15 per share, based on the market value at the date of issuance.
During the year ended February 28, 2010, the Company issued 19,709,660 shares of its restricted common stock to various individuals and entities for past support of the Company at a value of $10,458,150, or an average of $0.53 per share, based on the market value at the date of issuance.
During the year ended February 28, 2010, the Company issued 2,092,199 shares of its Series B preferred stock to various individuals and entities for global public relations at a value of $320,523, or an average of $0.153 per share, based on the market value of its common stock at the date of issuance. The Company cancelled these shares, and the shares were returned, on February 27, 2010 as the services were not performed by the recipients.
During the twelve months ended May 28, 2011, the Company issued 555,555 restricted shares of its common stock for $50,000 cash, or $0.09 per share, under a private placement.
During the twelve months ended February 29, 2012 the Company issued 14,833,000 restricted shares of its common stock for $350,000.00.
In September, 2012 the Company issued 1,000,000 common restricted shares, and 5,000,000 common restricted shares to two (2) debt holders in debt reduction of a an aggregate $6,000 at par value.
In September, 2012 the Company issued 2,500,00 common restricted shares for services to Paramount Capital for consulting services.
The Company has not adopted a stock option plan and has not granted any stock options or issued any warrants as of Nov. 30, 2012.
Note 7 – Income Taxes
Deferred income taxes have been provided to show the effect of temporary differences between the recognition of expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities, and their reported amounts in the consolidated financial statements. In assessing the realizability of deferred tax assets, the Company assesses the likelihood that deferred tax assets will be recovered through tax planning strategies or from future taxable income, and to the extent that recovery is not likely or there is insufficient operating history, a valuation allowance is established. The Company adjusts the valuation allowance in the period management determines it is more likely than not that net deferred tax assets will or will not be realized. As of February 29, 2012 and February 28, 2011, the Company has provided a valuation allowance for all net deferred tax assets due to their current realization not being more likely than not.
The provisions for income taxes differ from the amount computed by applying the statutory federal income tax rate to Income before provision for income taxes. The source and tax effects of the differences are as follows for the twelve months ended February 29, 2012 and February 28, 2011:
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|
|
2012
|
|
|
2011
|
|
|
U.S. federal statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
Valuation reserve
|
|
|
- 34
|
%
|
|
|
-34
|
%
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|
Total
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|
|
0
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%
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|
|
0
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%
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As of Aug. 31, 2012, the Company did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during the next 12 months. Any interest or penalties related to unrecognized tax benefits is recognized in income tax expense. Since there are no unrecognized tax benefits as a result of tax positions taken, there are no accrued penalties or interest.
Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the consolidated financial statements. Tax positions include, but are not limited to, the following:
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-
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An allocation or shift of income between taxing jurisdictions;
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|
-
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The characterization of income or a decision to exclude reportable taxable income in a tax return; or
|
|
-
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A decision to classify a transaction, entity or other position in a tax return as tax exempt.
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The Company reflects tax benefits only if it is more likely than not that we will be able to sustain the tax position, based on its technical merits. If a tax benefit meets this criterion, it is measured and recognized based on the largest amount of benefit that is cumulatively greater than 50% likely to be realized. The Company has no unrecognized tax benefits as of February 29, 2012.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on the Company’s balance sheets at Nov. 30, 2012, and has not recognized interest and/or penalties in the statement of operations for either period.
Note 8 – Subsequent Events
The Company has evaluated subsequent events through the date the financial statements were issued and filed with Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.
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