XOTC:SILA Annual Report 10-K Filing - 7/31/2012

Effective Date 7/31/2012



­­UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

R
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended July 31, 2012

OR

£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 333-147056
 
(Exact Name of Registrant as Specified in Its Charter)

Nevada
 
35-2302128
(State or Other Jurisdiction
 
(I.R.S. Employer Identification
Of Incorporation or Organization)
 
Number)
     
10775 Double R Boulevard
Reno, NV
 
 
89521
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code (775) 996-8200

Securities registered pursuant to Section 12(b) of the Act:

None.
(Title of Class)

Securities registered pursuant to Section 12(g) of the Act:

None.
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes þ No o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required 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 (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o Accelerated filer o Non-accelerated filer o
Smaller reporting company þ
   
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). þ Yes o No

The aggregate market value of voting stock held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter, January 31, 2012, was $2,379,113.  For purposes of this computation, it has been assumed that the shares beneficially held by directors and officers of registrant were “held by affiliates”; this assumption is not to be deemed to be an admission by such persons that they are affiliates of registrant.
 
The number of shares of registrant’s common stock outstanding as of October 23, 2012, was 89,804,393.

DOCUMENTS INCORPORATED BY REFERENCE
 
No documents are incorporated by reference.
 


 
 

 
TABLE OF CONTENTS

PART I      
         
ITEM 1.
BUSINESS
    1  
ITEM 1A.
RISK FACTORS
    5  
ITEM 1B.
UNRESOLVED STAFF COMMENTS
    11  
ITEM 2.
PROPERTIES
    11  
ITEM 3.
LEGAL PROCEEDINGS
    11  
ITEM 4.
MINE SAFETY DISCLOSURES
    11  
           
PART II        
           
ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES13
    12  
ITEM 6.   
SELECTED FINANCIAL DATA14
    13  
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    13  
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    17  
ITEM 8.
FINANCIAL STATEMENTS
    17  
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL  DISCLOSURE  
    18  
ITEM 9A(T).
CONTROLS AND PROCEDURES
    18  
ITEM 9B.
OTHER INFORMATION
    18  
           
PART III        
           
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    19  
ITEM 11.
EXECUTIVE COMPENSATION
    22  
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    23  
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 
    24  
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
    24  
           
PART IV        
           
ITEM 15.
EXHIBITS
    25  
 
SIGNATURES
    26  
 
 
 

 
 
PART I

ITEM 1.  BUSINESS

Description Of Business

As used in this Annual Report on Form 10-K, unless otherwise indicated, the terms “we,” “us,” “our” and “the Company” refer to Gold American Mining Corp., a Nevada corporation.

Forward-Looking Statements and Associated Risks.  This Annual Report on Form 10-K contains forward-looking statements.  Such forward-looking statements include statements regarding, among other things, (1) discussions about mineral resources and mineralized material, (2) our projected sales and profitability, (3) our growth strategies, (4) anticipated trends in our industry, (5) our future financing plans, (6) our anticipated needs for working capital, (7) our lack of operational experience and (8) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this filing generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under Item 1A below and other risks and matters described in this filing and in our other SEC filings. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur as projected.  We do not undertake any obligation to update any forward-looking statements.

The Company

Overview

We are a precious metal mineral acquisition, exploration and development company, formed in Nevada on July 2, 2007.  At the time of our incorporation, we were incorporated under the name “The Golf Alliance Corporation,” and our original business plan was to act as a service-based firm that would provide opportunities for golfers to play on private courses normally closed to them because of membership requirements.  On February 12, 2010, Johannes Petersen acquired the majority of the shares of our issued and outstanding common stock in accordance with a stock purchase agreement by and between Mr. Petersen and John Fahlberg.  Further, on March 5, 2010, we effected a name change to “Silver America, Inc.” and at the same time effected a 50-for-1 forward stock split and increased our authorized capital from 100,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001 per share, to 500,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001. In addition to the name change, we changed our intended business purpose to that of precious metal mineral exploration, development and production. Unless specifically stated otherwise, all share amounts referenced herein, will refer to post-forward stock split share amounts.  On June 23, 2010, we effected a name change from Silver America, Inc., to “Gold American Mining Corp.” in order to better reflect the nature of our operations as a precious metal mining and exploration company, with a more specific emphasis on gold exploration. On October 5, 2012, Bret Bertolami acquired the majority of the shares of our issued and outstanding common stock in accordance with a stock purchase agreement by and between Mr. Petersen and Mr. Bertolami.
 
 
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Our primary business focus is to option, acquire, explore and develop precious metals properties in North America.  On April 26, 2010, we entered into a definitive option agreement (“Guadalupe Option Agreement”) with Yale Resources Ltd. (“Yale”) with respect to our acquisition of an exclusive option (the “Option”) to purchase an undivided 90% interest in those two certain mining concessions in Zacatecas State, Mexico, covering approximately 282.83 hectares (the “Guadalupe Property”).  The Guadalupe Option Agreement was entered into pursuant to a binding letter of intent between the parties (the “LOI”) dated March 5, 2010.

To exercise the option, we must pay cash to Yale, issue restricted shares of Company common stock to Yale, and fund exploration and development expenditures on the Guadalupe Property.  The cash payments contemplated under the agreement total $900,000 and are to be distributed in installments from the date of the LOI through December 30, 2013.  The number of Company shares to be issued to Yale total 1,000,000 and are to be distributed in installments from the date of the definitive agreement through December 30, 2013.  We are also obligated to fund a total of $2,000,000 worth of exploration and development on the Guadalupe Property by December 30, 2013.  Upon the execution and exercise of the Option, Yale will transfer a 90% undivided interest in the Guadalupe Property to the Company.  Yale will act as the operator for the project, and should the earn-in be completed, Yale will retain a 10% participating interest in the Guadalupe Property as well as a 2% NSR, which can be bought out in its entirety for $2,000,000.

In connection with the Guadalupe Option and Guadalupe Property, while conducting due diligence in connection with the Guadalupe Option and Guadalupe Property, during the quarter ended April 30, 2011, we learned that the validity of one of the two mining concessions may have been questionable.  During the quarter ended July 31, 2011, enquiries were made regarding a possible legal challenge to the ownership of the Guadalupe Property and we learned that a third-party threatened to challenge title. Although we started preliminary negotiations with this third-party, through Yale, the negotiations did not lead to an agreement to solve the dispute. Subsequently, we learned that the third-party may have filed a lawsuit against the underlying owner of the Guadalupe Property. Effective February 21, 2012 the option agreement was terminated and no additional payments are due.

On April 28, 2010, we entered into a definitive option agreement (the “Keeno Strike Option Agreement”) with four individuals (collectively, the “Optionor”) with respect to our acquisition of an exclusive option (the “Keeno Option”) to purchase an undivided 72% interest in those certain 12 mining claims and a mill site claim containing approximately 245 acres, located in Clark County, Nevada (“Keeno Property”).  To exercise the Keeno Option, we must pay cash to the Optionor, issue restricted shares of Company common stock to Optionor, and fund exploration and development expenditures on the Keeno Property.  The cash payments contemplated under the agreement total $272,000 to be paid in installments on or before June 30, 2010, such payments having been completed as of the date of the filing of this Annual Report on Form 10-K. The number of Company shares to be issued to Optionor total 2,000,000 and are to be distributed in installments from the date of the definitive agreement through October 31, 2011.  The Company needs to fund a minimum of $750,000 worth of exploration and development on the Keeno Property, with at least $400,000 to be incurred or funded on or before April 30, 2011 and $350,000 to be incurred or funded on or before April 30, 2012.  Upon our fulfillment of each of the above-referenced conditions and exercise of the Keeno Option, the Optionor will transfer an undivided 72% interest in the Keeno Property to us. Instead, we have chosen not to exercise the option by not funding the $400,000 in work commitments which were due on or before April 30, 2011, and the Option Agreement has been terminated.

On August 4, 2010, Gold American Mining Corp (the “Company”) and three individuals collectively referred to as the “Optionor” entered into a mineral property option agreement to acquire 100% interest in an approximately 178 acres property located in Opodepe Municipality, Sonara Sate, Mexico (“La Escondida” project). To exercise the option the Company shall pay cash and fund exploration and development expenditures on the project. The cash payments contemplated in the agreement total $765,000 and are distributed in installments from the date of the agreement through December 31, 2012. In addition to the above payment schedule the Company will pay a 1% royalty as a result of the exploitation activities or a $500,000 lump sum payment upon the Company’s discretion. Effective December 22, 2010 the option agreement was terminated and no additional payments are due.

There are numerous levels of government regulation associated with the activities of exploration and mining companies.  Permits that we, or the current operators of the mining properties we have an interest in, are maintaining and amending include “Notice of Intent” to explore, “Plan of Operations” to explore, “Plan of Operations” to mine, “Reclamation Permits,” “Air Quality Permits,” “Water Quality Permits,” “Industrial Artificial Pond Permits,” and several other health and safety permits.  These permits are subject to amendment or renewal during our operations.  Although there is no guarantee that the regulatory agencies will timely approve, if at all, the necessary permits for our current or anticipated operations, we have no reason to believe that necessary permits will not be issued in due course.  The total cost and effects on our operations of the permitting and bonding process cannot be estimated at this time.  The cost will vary for each project when initiated and could be material.
 
 
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Within the United States, the Federal government owns public lands that are administered by the Bureau of Land Management or the United States Forest Service.  Ownership of the subsurface mineral estate can be acquired by staking a twenty (20) acre mining claim granted under the General Mining Law of 1872, as amended (the “General Mining Law”).  The Federal government still owns the surface estate even though the subsurface can be controlled with a right to extract through claim staking.  Private fee lands are lands that are controlled by fee-simple title by private individuals or corporations.  These lands can be controlled for mining and exploration activities by either leasing or purchasing the surface and subsurface rights from the private owner.  Unpatented mining claims located on public land owned by another entity can be controlled by leasing or purchasing the claims outright from the owners.  Patented mining claims are claims that were staked under the General Mining Law, and through application and approval the owners were granted full private ownership of the surface and subsurface estate by the Federal government.  These lands can be acquired for exploration and mining through lease or purchase from the owners.  Tribal lands are those lands that are under control by sovereign Native American tribes.  Areas that show promise for exploration and mining can be leased or joint ventured with the tribe controlling the land.

Competition and Mineral Prices

Given the continual increase in the value of gold and silver, the business of acquiring, developing and/or exploring gold and silver properties is more competitive than ever before.  Our competitors include companies with larger staffs, greater resources and equipment and, as such, those companies may be in a better position to compete for mineral properties.  In order to compete with such companies, we need to raise additional capital.  The competitive nature of the business and the risks we are therefore faced with are discussed further in the item entitled “Risk Factors,” below.

Capital Equipment and R&D Expenditures

We are not currently conducting any research and development activities other than those relating to the possible acquisition of new gold and/or silver properties or projects.  As we proceed with our exploration programs, we may need to engage additional contractors and consider the possibility of adding permanent employees, as well as the possible purchase or lease of equipment.

Mining Projects

Reference is made to the previous discussion of the Keeno Option Agreement and the Guadalupe Option Agreement, and the mining development projects thereon, as disclosed above.

Employees

As of October 23, 2012 we had no employees other than our sole director and officer.

Patents/Trade Marks/Licenses/Franchises/Concessions/Royalty Agreements or Labor Contracts

We do not currently own any patents or trademarks.  Also, we are not a party to any license or franchise agreements, concessions, royalty agreements or labor contracts arising from any patents or trademarks.

Reports to Security Holders

We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.
 
 
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The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  The address of that site is www.sec.gov.

Government Regulations

Property Interests and Mining Claims

Our exploration activities are conducted in the state of Nevada and in Mexico.  Mineral interests may be owned by (a) the country, (b) the state or province, or (c) private parties.  Where prospective mineral properties are owned by private parties, or by the state, some type of property acquisition agreement is necessary in order for us to explore or develop such property.  Generally, these agreements take the form of long-term mineral leases under which we acquire the right to explore and develop the property in exchange for periodic cash payments during the exploration and development phase and a royalty, usually expressed as a percentage of gross production or net profits derived from the leased properties if and when mines on the properties are brought into production.  Other forms of acquisition agreements are exploration agreements coupled with options to purchase and joint venture agreements.  Where prospective mineral properties are held by the United States, mineral rights may be acquired through the location of unpatented mineral claims upon unappropriated federal land.  If the statutory requirements for the location of a mining claim are met, the locator obtains a valid possessory right to develop and produce minerals from the claim.  The right can be freely transferred and, provided that the locator is able to prove the discovery of locatable minerals on the claims, is protected against appropriation by the government without just compensation.  The claim locator also acquires the right to obtain a patent or fee title to his claim from the federal government upon compliance with certain additional procedures.  Since October 1994, however, the BLM has been prohibited by Acts of Congress from accepting any new mineral patent applications.

Mining claims are subject to the same risk of defective title that is common to all real property interests. Additionally, mining claims are self-initiated and self-maintained and therefore, possess some unique vulnerabilities not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims solely from an examination of the public real estate records and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location and maintenance of a claim.  If the validity of a patented mining claim is challenged by the BLM or the U.S. Forest Service on the grounds that mineralization has not been demonstrated, the claimant has the burden of proving the present economic feasibility of mining minerals located thereon.  Such a challenge might be raised when a patent application is submitted or when the government seeks to include the land in an area to be dedicated to another use.

Government Regulation

Mining operations and exploration activities are subject to various national, state and local laws and regulations in the United States and Mexico, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the United States, Mexico and in any other jurisdiction in which we will operate.  We are not aware of any current orders or directions relating to us with respect to the foregoing laws and regulations.

Environmental Regulation

Our gold and silver projects are subject to various federal and state laws and regulations governing protection of the environment.  These laws are continually changing and, in general, are becoming more restrictive.  It is our policy to conduct business in a way that safeguards public health and the environment.  We believe that our operations are and will be conducted in material compliance with applicable laws and regulations.

 
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Changes to current state or federal laws and regulations where we operate currently, or in jurisdictions where we may operate in the future, could require additional capital expenditures and increased operating and/or reclamation costs.  Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.

During fiscal year 2012, there were no material environmental incidents or non-compliance with any applicable environmental regulations on the properties now held by us.  We did not incur material capital expenditures for environmental control facilities during fiscal year 2012.

ITEM 1A.  RISK FACTORS

The risks described below are the ones we believe are most important for you to consider.  These risks are not the only ones that we face.  If events anticipated by any of the following risks actually occur, our business, operating results or financial condition could suffer and the price of our common stock could decline.

Risks Associated with our Business

We Have A Limited Operating History With Significant Losses And Expect Losses To Continue For The Foreseeable Future.

We have yet to establish any history of profitable operations.  We have incurred net losses of $96,822 and $2,603,217 for the fiscal years ended July 31, 2012 and 2011, respectively.  As a result, at July 31, 2012, we had an accumulated deficit of $4,158,081 and a total stockholders’ deficiency of $159,329. We have not yet generated any revenues. We expect that our revenues will not be sufficient to sustain our operations for the foreseeable future.  Our profitability will require the successful commercialization of our mining properties.  We may not be able to successfully commercialize our mines or ever become profitable.

There Is Doubt About Our Ability To Continue As A Going Concern Due To Recurring Losses From Operations, Accumulated Deficit And Insufficient Cash Resources To Meet Our Business Objectives, All Of Which Means That We May Not Be Able To Continue Operations.

Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the years ended July 31, 2012, and 2011, respectively, with respect to their doubt about our ability to continue as a going concern.  As discussed in Note 8 to our financial statements for the year ended July 31, 2012, we have generated operating losses since inception, and our cash resources are insufficient to meet our planned business objectives, which together raises doubt about our ability to continue as a going concern.
 
 
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We May Not Be Able To Secure Additional Financing To Meet Our Future Capital Needs Due To Changes In General Economic Conditions.

We anticipate needing significant capital to conduct further exploration and development needed to bring our existing mining properties into production and/or to continue to seek out appropriate joint venture partners or buyers for certain mining properties.  We may use capital more rapidly than currently anticipated and incur higher operating expenses than currently expected, and we may be required to depend on external financing to satisfy our operating and capital needs.  We may need new or additional financing in the future to conduct our operations or expand our business.  Any sustained weakness in the general economic conditions and/or financial markets in the United States or globally could adversely affect our ability to raise capital on favorable terms or at all.  From time to time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes.  We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding.  If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing stockholders.  If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends.  Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations.

Our Business And Operating Results Could Be Harmed If We Fail To Manage Our Growth Or Change.

Our business may experience periods of rapid change and/or growth that could place significant demands on our personnel and financial resources.  To manage possible growth and change, we must continue to try to locate skilled geologists, mappers, drillers, engineers, technical personnel and adequate funds in a timely manner.

We May Not Have Access To The Supplies And Materials Needed For Exploration, Which Could Cause Delays Or Suspension Of Our Operations.

Competitive demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of planned exploration activities.  Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times in our exploration programs.  Furthermore, fuel prices are rising.  We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available.  If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower can be obtained.

An Unsuccessful Material Strategic Transaction Or Relationship Could Result In Operating Difficulties And Other Harmful Consequences To Our Business.

We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions and relationships with third parties.  From time to time, we may engage in discussions regarding potential acquisitions or joint ventures.  Currently, we have entered into certain mining exploration and development agreements for mining properties in Nevada and Mexico, including the Keeno Strike Option Agreement and the Guadalupe Option Agreement (both of which at the time of filing this form 10K have been terminated). Any of these transactions could be material to our financial condition and results of operations, and the failure of any of these material relationships and transactions may have a negative financial impact on our business and our results of operations.

Attraction And Retention Of Qualified Personnel Is Necessary To Implement And Conduct Our Mineral Exploration Programs.

Our future success will depend largely upon the continued services of our Board members, executive officers and other key personnel.  Our success will also depend on our ability to continue to attract and retain qualified personnel with mining experience.   Key personnel represent a significant asset for us, and the competition for qualified personnel is intense in the mineral exploration industry.  We may have particular difficulty attracting and retaining key personnel in the initial phases of our exploration programs.  We do not have key-person life insurance coverage on any of our personnel.  The loss of one or more of our key people or our inability to attract, retain and motivate other qualified personnel could negatively impact our ability to complete our exploration programs.
 
 
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Risks Associated with our Industry

Environmental Controls Could Curtail Or Delay Exploration And Development Of Our Mines And Impose Significant Costs On Us.

We are required to comply with numerous environmental laws and regulations imposed by federal and state authorities.  At the federal level, legislation such as the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation Liability Act and the National Environmental Policy Act impose effluent and waste standards, performance standards, air quality and emissions standards and other design or operational requirements for various components of mining and mineral processing, including gold and silver mining and processing.  In addition, insurance companies are now requiring additional cash collateral from mining companies in order for the insurance companies to issue a surety bond.  This addition of cash collateral for a bond could have a significant impact on our ability to bring properties into production.

Many states have also adopted regulations that establish design, operation, monitoring, and closing requirements for mining operations.  Under these regulations, mining companies are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of mining operations.  Additionally, Nevada and other states require mining operations to obtain and comply with environmental permits, including permits regarding air emissions and the protection of surface water and groundwater.  Although we believe that the mining properties we currently have an interest in are in compliance with applicable federal and state environmental laws, changes in those laws and regulations may necessitate significant capital outlays or delays, may materially and adversely affect the economics of a given property, or may cause material changes or delays in our intended exploration, development and production activities.  Any of these results could force us to curtail or cease our business operations.

Proposed Legislation Affecting The Mining Industry Could Have An Adverse Effect On Us.

During the past several years, the United States Congress considered a number of proposed amendments to the General Mining Law of 1872, which governs mining claims and related activities on federal lands.  For example, a broad based bill to reform the General Mining Law of 1872, the Hardrock Mining and Reclamation Act of 2007 (H.R. 2262) was introduced in the U.S. House of Representatives on May 10, 2007, and was passed by the U.S. House of Representatives on November 1, 2007, and was submitted to the U.S. Senate where no further action was taken.  More recently, on January 27, 2009, the Hardrock Mining and Reclamation Act of 2009 (H.R. 699) was introduced.  If enacted, this act will have several negative impacts on us including but not limited to: requiring royalty payments of 8% of gross income from mining a claim on Federal land, or 4% of claims on Federal land that are subject to an existing permit; and prohibition of certain areas from being open to the location of mining claims, including wilderness study areas, areas of critical environmental concern and related areas.  Subcommittee hearings for the bill were held on February 26, 2009. This bill was proposed in a previous session of Congress and it didn’t come to a vote. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven’t passed are cleared from the books.

The extent of any such changes to the General Mining Law of 1872 that may be enacted is not presently known, and the potential impact on us as a result of future congressional action is difficult to predict.  If enacted, proposed legislation could adversely affect the economics of developing and operating our mining properties, which may consist of unpatented mining claims on federal lands.  Our financial performance could therefore be materially and adversely affected by passage of all or pertinent parts of the proposed legislation, which could force us to curtail or cease our business operations.

The Development And Operation Of Our Mining Projects Involve Numerous Uncertainties.

Mine development projects, including our planned projects, typically require a number of years and significant expenditures during the development phase before production is possible.
 
 
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Development projects are subject to the completion of successful feasibility studies, issuance of necessary governmental permits and receipt of adequate financing.  The economic feasibility of development projects is based on many factors such as:

estimation of reserves;
anticipated metallurgical recoveries;
future gold and silver prices; and
anticipated capital and operating costs of such projects.

Our mine development projects may have limited relevant operating history upon which to base estimates of future operating costs and capital requirements.  Estimates of proven and probable reserves and operating costs determined in feasibility studies are based on geologic and engineering analyses.

Any of the following events, among others, could affect the profitability or economic feasibility of a project:

unanticipated changes in grade and tonnage of material to be mined and processed;
unanticipated adverse geotechnical conditions;
incorrect data on which engineering assumptions are made;
costs of constructing and operating a mine in a specific environment;
availability and cost of processing and refining facilities;
availability of economic sources of power;
adequacy of water supply;
adequate access to the site;
unanticipated transportation costs;
government regulations, domestic and foreign (including regulations relating to prices, royalties, duties, taxes, restrictions on production, quotas on exportation of minerals, as well as the costs of protection of the environment and agricultural lands);
fluctuations in metal prices; and
accidents, labor actions and force majeure events.

Any of the above-referenced events may necessitate significant capital outlays or delays, may materially and adversely affect the economics of a given property, or may cause material changes or delays in our intended exploration, development and production activities.  Any of these results could force us to curtail or cease our business operations.
 
 
8

 

Mineral Exploration Is Highly Speculative, Involves Substantial Expenditures, And Is Frequently Non-Productive.

Mineral exploration involves a high degree of risk and exploration projects are frequently unsuccessful.  Few prospects that are explored end up being ultimately developed into producing mines.  To the extent that we continue to be involved in mineral exploration, the long-term success of our operations will be related to the cost and success of our exploration programs.  We cannot assure you that our mineral exploration efforts will be successful.  The risks associated with mineral exploration include:

the identification of potential economic mineralization based on superficial analysis;
the quality of our management and our geological and technical expertise; and
the capital available for exploration and development.

Substantial expenditures are required to determine if a project has economically mineable mineralization.  It may take several years to establish proven and probable reserves and to develop and construct mining and processing facilities.  Because of these uncertainties, our current and future exploration programs may not result in the discovery of reserves, the expansion of our existing reserves or the further development of our mines.

The Price Of Gold and Silver are Highly Volatile And A Decrease In The Price Of Gold or Silver Would Have A Material Adverse Effect On Our Business.

The profitability of mining operations is directly related to the market prices of metals.  The market prices of metals fluctuate significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar to other currencies, interest rates, and global economic and political conditions.  Price fluctuations of metals from the time development of a mine is undertaken to the time production can commence can significantly affect the profitability of a mine.  Accordingly, we may begin to develop one or more of our mining properties at a time when the price of metals makes such exploration economically feasible and, subsequently, incur losses because the price of metals decreases.  Adverse fluctuations of the market prices of metals may force us to curtail or cease our business operations.

Mining Risks And Insurance Could Have An Adverse Effect On Our Profitability.

Our operations are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as unusual or unexpected geological formations, environmental pollution, personal injuries, flooding, cave-ins, changes in technology or mining techniques, periodic interruptions because of inclement weather and industrial accidents.  Although maintenance of insurance to ameliorate some of these risks is part of our proposed exploration program associated with those mining properties we have an interest in, such insurance may not be available at economically feasible rates or in the future be adequate to cover the risks and potential liabilities associated with exploring, owning and operating our properties.  Either of these events could cause us to curtail or cease our business operations.

Due To The Uncertain Nature Of Exploration, There Is A Substantial Risk That We May Not Find Economically Exploitable Reserves Of Gold And/Or Silver.

The search for valuable minerals is an extremely risky business.  We do not know whether the claims and properties that we have optioned contain commercially exploitable reserves of gold and/or silver.  The likelihood of success must be considered in light of the costs, difficulties, complications, problems and delays encountered in connection with the exploration of mineral properties.  These potential problems include, but are not limited to, additional costs and unanticipated delays and expenses that may exceed current estimates.
 
 
9

 

We Face Significant Competition In The Mineral Exploration Industry.

We compete with other mining and exploration companies possessing greater financial resources and technical facilities than we do in connection with the acquisition of exploration properties and leases on prospects and properties and in connection with the recruitment and retention of qualified personnel.  Such competition may result in our being unable to acquire interests in economically viable gold and silver exploration properties or qualified personnel.

Our Applications For Exploration Permits May Be Delayed Or May Be Denied In The Future.

Exploration activities usually require the granting of permits from various governmental agencies.  For exploration drilling on unpatented mineral claims, a drilling plan must be filed with the Bureau of Land Management or the United States Forest Service, which may then take several months or more to grant the requested permit.  Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken.  Prehistoric or Indian grave yards, threatened or endangered species, archeological sites or the possibility thereof, difficult access, excessive dust and important nearby water resources may all result in the need for additional permits before exploration activities can commence.  With all permitting processes, there is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits or the refusal to grant required permits may not be granted at all, all of which may cause delays and unanticipated costs in conducting planned exploration activities.  Any such delays or unexpected costs in the permitting process could result in serious adverse consequences to the price of our stock and to the value of your investment.

Risks Associated with our Common Stock

The Market Price Of Our Common Stock Is Highly Volatile, Which Could Hinder Our Ability To Raise Additional Capital.

The market price of our common stock has been and is expected to continue to be highly volatile.  Factors, including regulatory matters, concerns about our financial condition, operating results, litigation, government regulation, developments or disputes relating to agreements, title to our properties or proprietary rights, may have a significant impact on the market price of our stock.  In addition, potential dilutive effects of future sales of shares of common stock by shareholders and by us, and subsequent sale of common stock by the holders of warrants and options could have an adverse effect on the price of our securities, which could hinder our ability to raise additional capital to fully implement our business, operating and development plans.

Penny Stock Regulations Affect Our Stock Price, Which May Make It More Difficult For Investors To Sell Their Stock.

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC.  Penny stocks generally are equity securities with a price per share of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market.  The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.  In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.  Our securities are subject to the penny stock rules, and investors may find it more difficult to sell their securities.
 
 
10

 

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.  PROPERTIES

We currently maintain our corporate offices at 10775 Double R Boulevard, Reno, NV 89521.  During the fiscal year ended July 31, 2012, we paid monthly rent of $225 for use of a virtual US corporate office, which we anticipate will be sufficient until we commence full operations.

ITEM 3.  LEGAL PROCEEDINGS

We are not aware of any material pending legal proceedings to which we are a party or of which our property is the subject.  We also know of no proceedings to which any of our directors, officers or affiliates, or any registered or beneficial holders of more than 5% of any class of our securities, or any associate of any such director, officer, affiliate or security holder are an adverse party or have a material interest adverse to us.

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable.
 
 
11

 

PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is not traded on any exchange.  Our common stock is quoted on OTC Bulletin Board, under the trading symbol “SILA.OB.”  We cannot assure you that there will be a market in the future for our common stock.

OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers.  OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
 
The following table reflects the high and low bid information for our common stock and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
 
The high and low bid prices of our common stock for the periods indicated below are as follows:
 
OTC Bulletin Board
Quarter Ended
 
High
   
Low
 
                 
October 31, 2011
  $ 0.179     $ 0.035  
January 31, 2012
  $ 0.065     $ 0.020  
April 30, 2012
  $ 0.060     $ 0.031  
July 31, 2012
  $ 0.039     $ 0.026  

Holders

As of October 23, 2012 there were nine (9) holders of record of our common stock.
 
Dividends
 
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future.  The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
 
 
12

 
 
Equity Compensation Plans
 
As of October 23, 2012, we did not have any equity compensation plans.

Recent Sales Of Unregistered Securities
 
All sales of unregistered securities sold by the Company during the fiscal year ended July 31, 2012 have been reported on Current Reports on Form 8-K, as filed with the Commission.

ITEM 6.  SELECTED FINANCIAL DATA

This information is not required because we are a smaller reporting company.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Except for historical information, the following Management’s Discussion and Analysis contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) discussions about mineral resources and mineralized material, (b) our projected sales and profitability, (c) our growth strategies, (d) anticipated trends in our industry, (e) our future financing plans, (f) our anticipated needs for working capital, (g) our lack of operational experience and (h) the benefits related to ownership of our common stock.  Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology.  This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements.  These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in this Report generally.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Report generally.  In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.

Overview

We are a precious metal mineral acquisition, exploration and development company, formed in Nevada on July 2, 2007.  At the time of our incorporation, we were incorporated under the name “The Golf Alliance Corporation,” and our original business plan was to act as a service-based firm that would provide opportunities for golfers to play on private courses normally closed to them because of membership requirements.  On February 12, 2010, Johannes Petersen acquired the majority of the shares of our issued and outstanding common stock in accordance with a stock purchase agreement by and between Mr. Petersen and John Fahlberg.  Further, on March 5, 2010, we effected a name change to “Silver America, Inc.” and at the same time effected a 50-for-1 forward stock split and increased our authorized capital from 100,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001 per share, to 500,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001. In addition to the name change, we changed our intended business purpose to that of precious metal mineral exploration, development and production.  Unless specifically stated otherwise, all share amounts referenced herein, will refer to post-forward stock split share amounts.  On June 23, 2010, we effected a name change from Silver America, Inc., to “Gold American Mining Corp.” in order to better reflect the nature of our operations as a precious metal mining and exploration company, with a more specific emphasis on gold exploration. On October 5, 2012, Bret Bertolami acquired the majority of the shares of our issued and outstanding common stock in accordance with a stock purchase agreement by and between Mr. Petersen and Mr. Bertolami.
 
 
13

 
 
Our primary business focus is to option, acquire, explore and develop precious metals properties in North America.  On April 26, 2010, we entered into a definitive option agreement (“Guadalupe Option Agreement”) with Yale Resources Ltd. (“Yale”) with respect to our acquisition of an exclusive option (the “Option”) to purchase an undivided 90% interest in those two certain mining concessions in Zacatecas State, Mexico, covering approximately 282.83 hectares (the “Guadalupe Property”).  The Guadalupe Option Agreement was entered into pursuant to a binding letter of intent between the parties (the “LOI”) dated March 5, 2010.
 
To exercise the option, we must pay cash to Yale, issue restricted shares of Company common stock to Yale, and fund exploration and development expenditures on the Guadalupe Property.  The cash payments contemplated under the agreement total $900,000 and are to be distributed in installments from the date of the LOI through December 30, 2013.  The number of Company shares to be issued to Yale total 1,000,000 and are to be distributed in installments from the date of the definitive agreement through December 30, 2013.  We are also obligated to fund a total of $2,000,000 worth of exploration and development on the Guadalupe Property by December 30, 2013.  Upon the execution and exercise of the Option, Yale will transfer a 90% undivided interest in the Guadalupe Property to the Company.  Yale will act as the operator for the project, and should the earn-in be completed, Yale will retain a 10% participating interest in the Guadalupe Property as well as a 2% NSR, which can be bought out in its entirety for $2,000,000.

In connection with the Guadalupe Option and Guadalupe Property, while conducting due diligence in connection with the Guadalupe Option and Guadalupe Property, during the quarter ended April 30, 2011, we learned that the validity of one of the two mining concessions may have been questionable.  During the quarter ended July 31, 2011, enquiries were made regarding a possible legal challenge to the ownership of the Guadalupe Property and we learned that a third-party threatened to challenge title. Although we started preliminary negotiations with this third-party, through Yale, the negotiations did not lead to an agreement to solve the dispute. Subsequently, we learned that the third-party may have filed a lawsuit against the underlying owner of the Guadalupe Property. Effective February 21, 2012 the option agreement was terminated and no additional payments are due.

On April 28, 2010, we entered into a definitive option agreement (the “Keeno Strike Option Agreement”) with four individuals (collectively, the “Optionor”) with respect to our acquisition of an exclusive option (the “Keeno Option”) to purchase an undivided 72% interest in those certain 12 mining claims and a mill site claim containing approximately 245 acres, located in Clark County, Nevada (“Keeno Property”).  To exercise the Keeno Option, we must pay cash to the Optionor, issue restricted shares of Company common stock to Optionor, and fund exploration and development expenditures on the Keeno Property.  The cash payments contemplated under the agreement total $272,000 to be paid in installments on or before June 30, 2010, such payments having been completed as of the date of the filing of this Annual Report on Form 10-K. The number of Company shares to be issued to Optionor total 2,000,000 and are to be distributed in installments from the date of the definitive agreement through October 31, 2011.  The Company needs to fund a minimum of $750,000 worth of exploration and development on the Keeno Property, with at least $400,000 to be incurred or funded on or before April 30, 2011 and $350,000 to be incurred or funded on or before April 30, 2012.  Upon our fulfillment of each of the above-referenced conditions and exercise of the Keeno Option, the Optionor will transfer an undivided 72% interest in the Keeno Property to us. Instead, we have chosen not to exercise the option by not funding the $400,000 in work commitments which were due on or before April 30, 2011, and the Option Agreement has been terminated.

Results of Operations

Year ended July 31, 2012 compared to the year ended July 31, 2011

We had a net loss of $96,822 for the year ended July 31, 2012, which was $2,506,395 lower than the net loss of $2,603,217 for the year ended July 31, 2011.  This change in our results over the two periods is primarily the result of an decrease of $2,162,769 in exploration costs, $234,250 in consulting expenses, $86,000 in general and administrative expenses, and $25,741 in professional fees.  The following table summarizes key items of comparison and their related increase (decrease) for the years ended July 31, 2012 and 2011:
 
 
14

 

   
Year Ended
       
   
July 31,
   
Increase
 
   
2012
   
2011
   
(Decrease)
 
                   
Revenues
 
$
0
   
$
0
   
$
0
 
Professional Fees
   
39,493
     
65,234
     
(25,741
Consulting Expenses
   
30,000
     
264,250
     
(234,250
)
Exploration Costs
   
6,021
     
2,168,790
     
(2,162,769
)
General and Administrative
   
17,892
     
103,892
     
(86,000
 )
                         
Total Operating Expenses
   
93,406
     
2,602,166
     
(2,508,760
                         
(Loss) from Operations
   
(93,406
)
   
(2,602,166
)
   
(2,508,760
)
                         
Net Interest Income (Expense)
   
(3,416
)
   
(1,051
)
   
2,365
 
                         
Loss from Operations Before Taxes
   
(96,822
)
   
(2,603,217
)
   
(2,506,395
)
                         
Net Loss
 
 $
(96,822
)
 
$
(2,603,217
)
 
$
(2,506,395
)
 
Liquidity And Capital Resources

Our balance sheet as of July 31, 2012, reflects assets of $5,227. As we had cash in the amount of $2,926 and a working capital deficit in the amount of $161,630 as of July 31, 2012, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
 
Working Capital

   
Year Ended
 
   
July 31,
 
   
2012
   
2011
 
             
Current assets
 
$
2,926
   
$
5,226
 
Current liabilities
   
164,556
     
80,287
 
Working capital
 
$
(161,630
)
 
$
(69,887

We anticipate generating losses and, therefore, may be unable to continue operations in the future. If we require additional capital, we would have to issue debt or equity or enter into a strategic arrangement with a third party.
 
 
15

 

Going Concern Consideration

As reflected in the accompanying financial statements, the Company is in the exploration stage with no revenue generating operations and has a net loss since inception of $4,158,081 and used cash in operations of $1,620,348 from inception. In addition, there is a working capital deficiency of $161,630 and a stockholder’s deficiency of $159,329 as of July 31, 2012. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

From March 5, 2010, the Company changed its intended business purpose to that of precious metals mineral exploration, development and production. 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. 

   
Year Ended
 
   
July 31,
 
   
2012
   
2011
 
             
Net Cash Used in Operating Activities
 
$
(68,208
 
 $
(918,980
)
Net Cash Used in Investing Activities
   
0
 
   
(2,099
)
Net Cash Provided by Financing Activities
   
65,908
     
918,103
 
Net Increase (Decrease) in Cash
 
$
(2,300
 
(2,976
)

Operating Activities

Net cash flow used in operating activities during the year ended July 31, 2012 was $68,208 – a decrease of $850,772 from the $918,980 net cash outflow during the year ended July 31, 2011. This decrease in the cash used in operating activities was primarily due to the termination of the Keeno and the Guadalupe Option Agreements.

Investing Activities

Cash used in investing activities during the year ended July 31, 2012 was nil – a decrease of $2,099 from the $2,099 net cash outflow during the year ended July 31, 2011. This decrease in the cash used in investing activities was primarily due to the lack of investing activities during the period.

Financing Activities

Financing activities during the year ended July 31, 2012, provided $65,908 to us, a decrease of $852,195 from the $918,103 provided by financing activities during the year ended July 31, 2011. During the year ended July 31, 2012, the company received $65,908 from loans and notes payable from related parties.
 
 
16

 

On May 7, 2010, we entered into an Equity Issuance Agreement with ZUG Financing Group S.A. (“ZUG”) wherein ZUG has agreed to advance up to $7,500,000 to our Company until December 31, 2011. As of July 31, 2012, we had received an aggregate of $1,200,000 in net proceeds from ZUG under the Equity Issuance Agreement. The Equity Issuance Agreement expired on December 31, 2011 and it wasn’t renewed.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain. Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain. As of July 31, 2012, none of our properties have proven reserves.

Recent Accounting Pronouncements

For recent accounting pronouncements, please refer to the notes to the financial statements section of this annual report.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are not required to provide disclosure under this item because we are a smaller reporting company.

ITEM 8.  FINANCIAL STATEMENTS

Our financial statements appear beginning at page F-1.
 
 
17

 

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING   AND FINANCIAL DISCLOSURE

We have not had any changes in or disagreements with our independent public accountants during the last two fiscal years.
.
ITEM 9A(T).  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Exchange Act, as of July 31, 2012, the end of the period covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the evaluation date, our Chief Executive Officer and Chief Financial Officer, concluded that there is a material weakness in internal control in management’s failure to issue stock certificates in a timely manner to shareholders, upon their meeting of all requirements to earn such shares, and therefore disclosure controls and procedures are not effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
 
Management's Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control system was designed to, in general, provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2012.  The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of July 31, 2012, our internal control over financial reporting was effective.

As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. The Certifying Officers have also concluded, based on our evaluation of our controls and procedures that as of July 31, 2012, our internal controls over financial reporting are effective and provide a reasonable assurance of achieving their objective.
 
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements under all potential conditions. Therefore, effective internal control over financial reporting provides only reasonable, and not absolute, assurance that a restatement of our financial statements would be prevented or detected.

Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting during its most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.
 
 
18

 
 
PART III
 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Our Bylaws state that our authorized number of directors shall be one or more and shall be set by resolution of our Board of Directors.  Our Board of Directors has fixed the number of directors at one, and we currently have one director.

Our current director and officers are as follows:

Name
 
Age
 
Position
           
Johannes Petersen
    40  
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

Our Director will serve in that capacity until our next annual shareholder meeting or until his successor is elected and qualified.  Officers hold their positions at the will of our Board of Directors.  There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

Johannes Petersen.  Mr. Petersen was appointed as a director and our President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer on February 12, 2010.  Mr. Petersen holds a BSc in Economics from Universidad del Pacifico (Peru) and an MBA degree from the London Business School (UK).  He brings experience gained from multiple managerial and directorship positions within diverse private and public companies. From 2003, Mr. Petersen gained business development and business planning experience with an emphasis in the resources industry.  He has worked in business planning and development for natural resource projects and has also covered several functions within the financial services industry, ranging from fixed income to currency trading.  

Mr. Petersen currently sits on the board of directors of American Power Corp (f/k/a Teen Glow Makeup Inc.), a U.S. public company currently quoted on the OTC Bulletin Board.

Mr. Petersen formerly worked for Hainan Mining Corporation Ltd, a U.K. private company, American Sierra Gold Corp. (f/k/a C.E. Entertainment, Inc.), a U.S. public company, currently quoted on the OTC Bulletin Board, Century Petroleum Corp. (f/k/a SOM Resources Inc.), a U.S. public company, currently quoted on the Pink Sheets, Dragon Gold Resources Inc. (n/k/a Edgeline Holdings, Inc.), a U.S. company previously listed on the OTC Bulletin Board, and formerly worked in Lima, Peru for the following: Peru Scan Trading SAC, Credibolsa SAB, Banco de Credito del Peru and CONASEV (Peruvian securities regulation agency equivalent to the SEC).

Other Directorships

Other than as set forth above, none of our directors hold any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
 
 
19

 

Board of Directors and Director Nominees

Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination.  The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted.  Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders.  If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission.  The letter should be accompanied by a résumé supporting the nominee’s qualifications to serve on the Board, as well as a list of references.

The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders.  Once a candidate has been identified, the Board reviews the individual’s experience and background and may discuss the proposed nominee with the source of the recommendation.  If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

Some of the factors, which the Board considers when evaluating proposed nominees, include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions.  The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

Conflicts of Interest

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses.  In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty.  As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.  They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

In general, officers and directors of a corporation are required to present business opportunities to the corporation if:

  
the corporation could financially undertake the opportunity;

  
the opportunity is within the corporation’s line of business; and

  
it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.

We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
 
 
20

 

Significant Employees

Other than as described above, we do not expect any other individuals to make a significant contribution to our business.

Legal Proceedings

None of our directors, executive officers or control persons has been involved in any of the following events during the past five years:

  
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

  
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

  
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

  
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended, or vacated.

No Audit Committee or Financial Expert

The Company does not have an audit committee or a financial expert serving on the Board of Directors.  The Company plans to form and implement an audit committee and hire a Chief Financial Officer who also may serve on the Board of Directors.

Family Relationships

There are no family relationships among our officers, directors, or persons nominated for such positions.

Code of Ethics

Due to our recent change in business strategy and objectives and our small size and limited resources, we have not yet adopted a code of ethics that applies to our principal executive officer and principal accounting officer, but intend to do so this year.

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act of 1934, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash only rights) and any changes in that ownership with the Securities and Exchange Commission.  The Company has not registered as a public company under Section 12 of the Securities Exchange Act of 1934, and therefore no reports have been filed under Section 16(a) thereunder.
 
 
21

 
 
 
ITEM 11.  EXECUTIVE COMPENSATION

Our Board of Directors, which at the time is composed of our sole director, has not established a separate compensation committee.  Instead, the Board of Directors reviews and approves executive compensation policies and practices, reviews, salaries and bonuses for our officer(s), decides on benefit plans, and considers other matters as may, from time to time, be referred to it.  We do not currently have a Compensation Committee Charter.  Our Board continues to emphasize the important link between our performance, which ultimately benefits all shareholders, and the compensation of our executives.  Therefore, the primary goal of our executive compensation policy is to closely align the interests of the shareholders with the interests of the executive officer(s).  In order to achieve this goal, we attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective of owners with an equity stake in us.

SUMMARY COMPENSATION TABLE
 
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)
 
Stock Awards
($)
 
Option Awards
($)
 
Non-Equity Incentive Plan Compensation
($)
 
Non-Qualified Deferred Compensation Earnings
($)
 
All Other Compensation
($)
   
Totals
($)
 
                                         
Johannes Petersen
 
2012
   
0
     
0
     
0
     
0
     
0
     
0
     
30,000(1)
     
30,000
 
(President, CEO, CFO, Secretary and Director)  
2011
   
0
     
0
     
0
     
0
     
0
     
0
     
90,000(1)
     
90,000
 
   
2010
   
0
     
0
     
0
     
0
     
0
     
0
     
22,500(1)
     
22,500
 
                                                                     
John Fahlberg
(Former President,
Chief Executive Officer, Treasurer, Secretary and Director)
 
2010
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
                                                                     
Martha C. Fahlberg (Former Director)
 
2010
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
 
(1)  
Mr. Petersen earns $2,500 per month based on a consulting arrangement with the Company for providing services as an executive officer of the Company.
 
None of our named executive officers received any compensation from us during the fiscal years ended July 31, 2012, and July 31, 2011, but for a consulting arrangement with Mr. Petersen as described below under “Management Agreements.”
 
 
22

 

Option Grants

As of July 31, 2012 we had not granted any options or stock appreciation rights to our named executive officers or directors.
 
Management Agreements
 
We have entered into a consulting arrangement with Johannes Petersen, our sole executive officer, pursuant to which, we pay Mr. Petersen $2,500 per month for providing consulting services in his capacity as Chief Executive Officer and Chief Financial Officer, however, such consulting arrangement is not pursuant to any written agreement.
 
Compensation of Directors
 
Our directors did not receive any compensation for their services as directors from our inception to July 31, 2012.  We have no formal plan for compensating our directors for their services in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.
 
Pension, Retirement or Similar Benefit Plans
 
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers.  We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
 
Compensation Committee
 
We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions.  The Board of Directors as a whole participates in the consideration of executive officer and director compensation.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth the ownership, as of September 30, 2012, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of September 30, 2012, there were 89,804,393 shares of our common stock issued and outstanding.  All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted.  The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Form 10-K.

Title of Class
 
Name and Address of
Beneficial Owner
 
Amount and 
Nature of 
Beneficial 
Ownership
   
Percent of Class
 
                 
Common Stock
 
Johannes Petersen
c/o Gold American Mining Corp.
10775 Double R Boulevard
Reno, NV 89521
    45,000,000       50.01 %
All Officers and Directors as a Group 
    45,000,000       50.01 %

 
23

 
 
Changes in Control

As of July 31, 2012 we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of termination of employment or a change in our control.

Securities authorized for issuance under equity compensation plans.

As of July 31, 2012, we did not have any equity compensation plans in effect.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

There have been no transactions since the beginning of our last fiscal year or any currently proposed transactions in which we are, or plan to be, a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.

Director Independence

Our securities are quoted on the OTC Bulletin Board, which does not have any director independence requirements.  Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees. The aggregate fees paid for the annual audit of financial statements included in our Annual Report for the year ended July 31, 2012, and the review of our quarterly reports for such years amounted to $19,943.  The aggregate fees paid for the annual audit of financial statements included in our Annual Report for the year ended July 31, 2011, and the review of our quarterly reports for such year, amounted to $26,284.

Audit Related Fees. For the years ended July 31, 2012, and July 31, 2011, there were no fees billed for other audit related fees.

Tax Fees. For the years ended July 31, 2012, and July 31, 2011, we paid $0 and $0, respectively, for tax fees.

All Other Fees.  For the years ended July 31, 2012, and July 31, 2011, there were no fees billed for services other than services described above.

Our Board of Directors serves as the Audit Committee and has unanimously approved all audit and non-audit services provided by the independent auditors. The independent accountants and management are required to periodically report to the Board of Directors regarding the extent of services provided by the independent accountants, and the fees for the services performed to date.
 
There have been no non-audit services provided by our independent accountant for the years ended July 31, 2012 and 2011.
 
 
24

 

PART IV

ITEM 15.  EXHIBITS

(a)(1)(2) Financial Statements: See index to financial statements and supporting schedules.

(a)(3) Exhibits.

Exhibit No.
 
Description
     
3.1
 
Articles of Incorporation(1)
3.2
 
Certificate of Amendment, effective March 5, 2010(2)
3.3
 
Certificate of Amendment, effective June 23, 2010(6)
3.4
 
Bylaws(1)
10.1
 
Stock Purchase Agreement by and between John Fahlberg and Johannes Petersen, dated February 12, 2010(3)
10.2
 
Letter of Intent by and between the Company and Yale Resources, Ltd., dated March 5, 2010(2)
10.3
 
Guadalupe Option Agreement between the Company and Yale Resources, dated April 26, 2010. (4)
10.4
 
Keeno Strike Option Agreement between the Company and Certain Individuals, dated April 28, 2010. (4)
10.5
 
Private Placement Subscription Agreement, dated April 30, 2010(5)
10.6
 
Equity Issuance Agreement between the Company and ZUG Financing Group S.A., dated May 7, 2010. (7)
10.7
 
Private Placement Subscription Agreement, dated July 1, 2010(8)
10.8
 
Private Placement Subscription Agreement, dated August 27, 2010(9)
10.9
 
Private Placement Subscription Agreement, dated September 30, 2010(10)
10.10
 
Private Placement Subscription Agreement, dated February 18, 2011 (11)
 
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
Certification of Chief Executive and Chief Financial Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
__________
* Filed herewith.
(1)
Incorporated by reference from Form SB-2 filed with the SEC on October 31, 2007.
(2)
Incorporated by reference from Form 8-K filed with the SEC on March 10, 2010.
(3)
Incorporated by reference from Form 8-K filed with the SEC on February 18, 2010.
(4)
Incorporated by reference from Form 10-Q filed with the SEC on June 21, 2010.
(5)
Incorporated by reference from Form 8-K filed with the SEC on May 6, 2010.
(6)
Incorporated by reference from Form 8-K filed with the SEC on June 28, 2010.
(7)
Incorporated by reference from Form 8-K filed with the SEC on May 10, 2010.
(8)
Incorporated by reference from Form 8-K filed with the SEC on July 8, 2010.
(9)
Incorporated by reference from Form 8-K filed with the SEC on September 2, 2010.
(10)
Incorporated by reference from Form 8-K filed with the SEC on October 1, 2010.
(11)
Incorporated by reference from Form 8-K filed with the SEC on February 22, 2011.
 
 
25

 
 
SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GOLD AMERICAN MINING CORP.
 
       
Date:  October 23, 2012
By:
/s/ Johannes Petersen  
   
Name: Johannes Petersen
 
   
Title: Chief Executive Officer
 
   
(Principal Executive Officer)
 
 
Date:  October 23, 2012
By:
/s/ Johannes Petersen  
   
Name: Johannes Petersen
 
   
Title: Chief Executive Officer
 
   
(Principal Accounting and Financial Officer)
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
SIGNATURE
  TITLE   DATE
         
/s/ Johannes Petersen
       
Johannes Petersen
 
Sole Director
 
October 23, 2012
 
 
26

 
 
 
GOLD AMERICAN MINING CORP
 (AN EXPLORATION STAGE COMPANY)

CONTENTS
 
PAGE
F-1
REPORT OF REGISTERED INDEPENDENT AUDITOR
     
PAGE
F-2
BALANCE SHEETS AS OF JULY 31, 2012 AND JULY 31, 2011
     
PAGE
F-3
STATEMENT OF OPERATIONS FOR THE YEARS ENDED JULY 31, 2012 AND 2011 AND FOR THE PERIOD FROM JULY 2, 2007 (INCEPTION) TO JULY 31, 2012
     
PAGE
F-4
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY /(DEFICIENCY) FOR THE PERIOD FROM JULY 2, 2007 (INCEPTION) TO JULY 31, 2012
     
PAGE
F-5
STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JULY 31, 2012 AND 2011 AND FOR THE PERIOD FROM JULY 2, 2007 (INCEPTION) TO JULY 31, 2012
     
PAGES
F-6 - 18
NOTES TO FINANCIAL STATEMENTS
     
 
 
 
 
 
i

 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
To the Board of Directors of:
Gold American Mining Corp.
(An Exploration Stage Company)

We have audited the accompanying balance sheets of Gold American Mining Corp. (An Exploration Stage Company) as of July 31, 2012 and 2011 and the related statements of operations and changes in stockholders’ equity/(deficiency) and cash flows for the years ended July 31, 2012 and 2011 and for the period from July 2, 2007 (Inception) to July 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Gold American Mining Corp.  (an Exploration Stage Company) as of July 31, 2012 and 2011 and the results of its of operations and its cash flows for the years ended July 31, 2012 and 2011 and for the period from July 2, 2007 (Inception) to July 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 8 to the financial statements, the Company is in the exploration stage with minimal operations, has a net loss from inception of $4,158,081 and used cash in operations of $1,620,348 since inception. In addition, there is a working capital deficiency of $161,630 and a stockholders’ deficiency of $159,329 as of July 31, 2012. This raises substantial doubt about the Company's ability to continue as a going concern.  Management's plans concerning this matter are also described in Note 8. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.


WEBB & COMPANY, P.A
Certified Public Accountants.

Boynton Beach, Florida
October 23, 2012
 
 
 
 
F-1

 
 
 

 
Gold American Mining, Corp.
(An Exploration Stage Company)
 Balance Sheets
 
ASSETS
             
   
July 31, 2012
   
July 31, 2011
 
             
Current Assets
           
Cash
  $ 2,926     $ 5,226  
Prepaid Expenses
    -       5,174  
Total Current Assets
    2,926       10,400  
                 
Property and Equipment, net
    2,301       3,121  
                 
Total Assets
  $ 5,227     $ 13,521  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                 
Current Liabilities
               
Accounts Payable and Accrued Expenses
  $ 10,404     $ 22,043  
Accounts Payable - related party
    67,500       37,500  
Notes Payable  - related party
    20,000       18,500  
Loans Payable - related party
    66,652       2,244  
Total  Liabilities
    164,556       80,287  
                 
Commitments and Contingencies  (See Note 7)
               
                 
Stockholders' Deficiency
               
Preferred stock, $0.00001 par value; 10,000,000 shares authorized,
               
none issued and outstanding
    -       -  
Common stock, $0.00001 par value; 500,000,000 shares authorized, 89,804,393 and 89,804,393
         
 issued and outstanding, respectively
    898       898  
Additional paid-in capital
    3,997,854       3,993,595  
Deficit accumulated during the exploration stage
    (4,158,081 )     (4,061,259 )
Total Stockholders' Deficiency
    (159,329 )     (66,766 )
                 
Total Liabilities and Stockholders' Deficiency
  $ 5,227     $ 13,521  
 
See accompanying notes to audited financial statements.
 
 
F-2

 
 
Gold American Mining, Corp.
(An Exploration Stage Company)
Statements of Operations
 
   
For the Years Ended
   
For the Period
From July 2, 2007 (Inception) to
 
   
July 31, 2012
   
July 31, 2011
   
July 31, 2012
 
Operating Expenses
                 
Professional fees
  $ 39,493     $ 65,234     $ 250,743  
Consulting Expense
    30,000       264,250       395,925  
Exploration Costs
    6,021       2,168,790       3,259,729  
General and administrative
    17,892       103,892       246,082  
Total Operating Expenses
    93,406       2,602,166       4,152,479  
                         
Loss from Operations
    (93,406 )     (2,602,166 )     (4,152,479 )
                         
Other Income/(Expenses)
                       
Interest Income
    -       20       22  
Interest Expense
    (3,416 )     (1,071 )     (5,624 )
                         
LOSS FROM OPERATIONS BEFORE INCOME TAXES
    (96,822 )     (2,603,217 )     (4,158,081 )
                         
Provision for Income Taxes
    -       -       -  
                         
NET LOSS
  $ (96,822 )   $ (2,603,217 )   $ (4,158,081 )
                         
Net Loss Per Share  - Basic and Diluted
  $ (0.00 )   $ (0.03 )        
                         
Weighted average number of shares outstanding
         
  during the period - Basic and Diluted
    89,804,393       88,233,857          
 
See accompanying notes to audited financial statements.
 
 
F-3

 
 
Gold American Mining, Corp.
(An Exploration Stage Company)
Condensed Statement of Changes in Stockholders' Equity/(Deficiency)
For the period from July 2, 2007 (Inception) to July 31, 2012
 
   
Preferred stock
   
Common stock
   
Additional
paid-in
   
Deficit
accumulated during
exploration
   
Total
Stockholders'
Equity/
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
(Deficiency)
 
                                           
Balance July 2, 2007
    -     $ -       -     $ -     $ -     $ -     $ -  
                                                             
Common stock issued for services to founder ($0.00001)
    -       -       250,000,000       2,500       (2,450 )     -       50  
                                                         
In kind contribution of services
    -       -       -       -       1,080       -       1,080  
                                                         
Net loss for the period July 2, 2007 (inception) to July 31, 2007
    -       -       -       -       -       (4,879 )     (4,879 )
                                                         
Balance, July 31, 2007
    -       -       250,000,000       2,500       (1,370 )     (4,879 )     (3,749 )
                                                         
Common stock issued for cash ($0.10 per share)
    -       -       40,000,000       400       79,600       -       80,000  
                                                         
In kind contribution of services
    -       -       -       -       5,760       -       5,760  
                                                         
Net loss for the year ended July 31, 2008
    -       -       -       -       -       (70,555 )     (70,555 )
                                                         
Balance, July 31, 2008
    -       -       290,000,000       2,900       83,990       (75,434 )     11,456  
                                                         
In kind contribution of services
    -       -       -       -       5,760       -       5,760  
                                                         
In kind contribution of interest
    -       -       -       -       256       -       256  
                                                         
Net loss for the year ended July 31, 2009
    -       -       -       -       -       (31,521 )     (31,521 )
                                                         
Balance, July 31, 2009
    -       -       290,000,000       2,900       90,006       (106,955 )     (14,049 )
                                                         
Shares issued in exchange for mining rights
    -       -       700,000       7       657,993       -       658,000  
                                                         
Shares issued for cash ($0.60 per share)
    -       -       333,333       3       199,997       -       200,000  
                                                         
Shares returned by founder as an in kind contribution
    -       -       (205,000,000 )     (2,050 )     2,050       -       -  
                                                         
Shares issued for services
    -       -       37,500       0       48,375       -       48,375  
                                                         
Shares and warrants issued for cash ($1.10 per share)
    -       -       272,727       3       299,997       -       300,000  
                                                         
Forgiveness of debts by principal stockholder
    -       -       -       -       24,262       -       24,262  
                                                         
Expenses paid by shareholder on Company's behalf
    -       -       -       -       60,871       -       60,871  
                                                         
In kind contribution of services
    -       -       -       -       4,320       -       4,320  
                                                         
In kind contribution of interest
    -       -       -       -       627       -       627  
                                                         
Net loss for the year ended July 31, 2010
    -       -       -       -       -       (1,351,087 )     (1,351,087 )
                                                         
Balance, July 31, 2010
    -       -       86,343,560       863       1,388,498       (1,458,042 )     (68,681 )
                                                         
Shares issued for services
    -       -       152,500       2       88,948       -       88,950  
                                                         
Shares issued in exchange for mining rights
    -       -       1,600,000       16       1,615,984       -       1,616,000  
                                                         
Shares and warrants issued for cash ($0.80 per share)
    -       -       375,000       4       299,996       -       300,000  
                                                         
Shares and warrants issued for cash ($0.75 per share)
    -       -       533,333       5       399,995       -       400,000  
                                                         
Shares and warrants issued for cash ($0.25 per share)
    -       -       800,000       8       199,992       -       200,000  
                                                         
In kind contribution of interest
    -       -       -       -       182       -       182  
                                                         
Net loss for the year ended July 31, 2011
            -       -       -       -       (2,603,217 )     (2,603,217 )
                                                         
Balance,  July 31, 2011
    -       -       89,804,393       898       3,993,595       (4,061,259 )     (66,766 )
                                                         
In kind contribution of  legal services
    -       -       -       -       900       -       900  
                                                         
In kind contribution of interest
    -       -       -       -       3,359       -       3,359  
                                                         
Net loss for the year ended July 31, 2012
    -       -       -       -       -       (96,822 )     (96,822 )
                                                         
Balance,  July 31, 2012
    -     $ -       89,804,393     $ 898     $ 3,997,854     $ (4,158,081 )   $ (159,329 )
 
See accompanying notes to audited financial statements.
 
 
F-4

 
 
Gold American Mining, Corp.
(An Exploration Stage Company)
 Statements of Cash Flows
 
   
For the Years Ended
   
For the Period from
July 2, 2007
(Inception) to
 
   
July 31, 2012
   
July 31, 2011
   
July 31, 2012
 
                   
Cash Flows From Operating Activities:
                 
Net Loss
  $ (96,822 )   $ (2,603,217 )   $ (4,158,081 )
Adjustments to reconcile net loss to net cash used in operations
                       
Depreciation expense
    820       8,972       12,007  
Stock issued for mining rights
    -       1,616,000       2,274,000  
Impairment of website
    -       14,253       14,253  
Stock issued for services
    -       88,950       -  
In-kind contribution of services
    900       -       17,820  
In-kind contribution of interest
    3,359       182       4,424  
Changes in operating assets and liabilities:
                       
Increase/(Decrease) in accounts payable and accrued expenses
    (11,639 )     (92,796 )     10,404  
Increase in accounts payable - related party
    30,000       37,500       67,500  
(Increase)/Decrease in prepaid expenses
    5,174       11,176       -  
Net Cash Used In Operating Activities
    (68,208 )     (918,980 )     (1,620,348 )
                         
Cash Flows From Investing Activities:
                       
Advance  receivable - related party
    -       (1,123 )     (1,123 )
Repayment of advance receivable - related party
    -       1,123       1,123  
Purchase of fixed assets
    -       (2,099 )     (28,561 )
Net Cash Used In Investing Activities
    -       (2,099 )     (28,561 )
                         
Cash Flows From Financing Activities:
                       
Repayment of loan payable- related party
    -       (23,881 )     (66,276 )
Expenses paid by shareholder on Company's behalf
    -       -       60,871  
Proceeds from loans payable-related party
    64,408       41,984       157,190  
Proceeds from notes payable-related party
    1,500       -       20,000  
Proceeds from issuance of common stock
    -       900,000       1,480,050  
Net Cash Provided by Financing Activities
    65,908       918,103       1,651,835  
                         
Net Increase / (Decrease) in Cash
    (2,300 )     (2,976 )     2,926  
                         
Cash at Beginning of Period
    5,226       8,202       -  
                         
Cash at End of Period
  $ 2,926     $ 5,226     $ 2,926  
                         
Supplemental disclosure of cash flow information:
                       
                         
Cash paid for interest
  $ -     $ 888     $ 1,005  
Cash paid for taxes
  $ -     $ -     $ -  
 
Supplemental disclosure of non-cash investing and financing activities:
 
During the year ended July 31,2010, the Company's principal stockholder forgave loans of $24,262.  The forgiveness was treated as contributed capital from the principal stockholder.
 
See accompanying notes to audited financial statements.
 
 
F-5

 
 
NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization

Gold American Mining, Corp. (an exploration stage company) (the "Company") was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Gold American Mining, Corp. is a precious metal mineral acquisition, exploration and development company.

Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.

Activities during the exploration stage include developing the business plan and raising capital.

The Company is in the exploration stage in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 915 (formerly Statement of Financial Accounting Standards (“SFAS”) No.7, “Accounting and Reporting by Exploration Stage Enterprises”).

On March 5, 2010, the Company amended its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock from 100,000,000 to 500,000,000.

On June 23, 2010 the Company amended its articles of incorporation to change its name to Gold American Mining Corp.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and expenses during the reported period. Significant estimates include valuation of in kind contrition of interest and services and the valuation of deferred tax assets. Actual results could differ from those estimates.

(C) Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At July 31, 2012 and July 31, 2011, the Company had no cash equivalents.
 
 
F-6

 

(D) Exploration and Development Costs
 
Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB Accounting Standards Codification No. 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.

Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.

During the years ended July 31, 2012 and 2011, the Company recorded exploration costs of $6,021 and $2,168,790, respectively.

(E) Property and Equipment

The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for computer equipment.

In accordance with FASB Accounting Standards Codification No. 360, Property, Plant and Equipment, the Company carries long-lived assets at the lower of the carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount of the assets, an impairment loss is recognized. Fair value, for purposes of calculating impairment, is measured based on estimated future cash flows, discounted at a market rate of interest.

There were no impairment losses recorded during the years ended July 31, 2012 and 2011, respectively.

(F) Website Development

The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwills and Other. Costs incurred in the planning stage of a website are expensed, while costs incurred in the development state are capitalized and amortized over the estimated three year life of the asset.

(G) Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share.” As of July 31, 2012 and 2011 there were 854,166 and 990,530, respectively, warrants issued and outstanding that were not included in the computation of earnings per share because their inclusion is anti-dilutive.
 
 
F-7

 

(H) Revenue Recognition

The Company recognizes revenue on arrangements in accordance with FASB Accounting Standards Codification No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured. The Company has not yet entered into any contractual obligation to deliver ore product or finished metals.

(I) Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The provision for income tax expense (recovery) is comprised the following amounts:

   
2012
   
2011
 
             
Expected income tax (recovery) expense at the statutory rate of 34%
  $ (32,919 )   $ (885,094 )
Tax effect of expenses that are not deductible for tax purposes (net of other amounts deductible for tax purposes)
    1,448       579,745  
Change in valuation allowance
    31,471       305,349  
Provision for income taxes
  $ -     $ -  

The components of deferred income tax in the accompanying balance sheets are as follows:

   
2012
   
2011
 
             
Deferred income tax asset:
           
Net operating loss carryforwards
  $ 585,769     $ 554,298  
Valuation allowance
    (585,769 )     (554,298 )
Deferred income taxes
  $ -     $ -  

At July 31, 2012 the company had net operating loss carryforwards of approximately $1,616,158 that may be offset against future taxable income. All other losses incurred by the Company in previous years are limited due to Internal Revenue Code Section 382 which restricts the deductibility of prior net operating losses where there has been a change in control. These net operating loss carryforwards will expire at approximately $80,800 annually through the year ending 2032.
 
 
F-8

 

The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire through the year 2030.

The net change in the valuation allowance for the year ended July 31, 2012 and 2011 was an approximate increase of $130,000 and $201,000, respectively.

The components of income tax expense related to continuing operations are as follows:

   
2012
   
2011
 
             
Federal
  $ -     $ -  
Current
    -