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SGAE > SEC Filings for SGAE > Form 10-K on 6-Dec-2013All Recent SEC Filings

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Form 10-K for SIGA RESOURCES INC.


6-Dec-2013

Annual Report


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Corporate Organization and History within the Last Three years

We were incorporated under the laws of the State of Nevada on January 18, 2007 under the name Siga Resources Inc. We do not have any subsidiaries or affiliated companies. We have one potential project on the Lucky Thirteen Claim. The venture has to date defaulted on payments to keep the ownership in the Lucky Thirteen Claim intact. Consequently, we are at risk of losing our interests in the Lucky Thirteen Claim entirely. We have a verbal commitment by the owner of the Claim. The owner is in the position to renege on his verbal commitment without reprisal.

We have not been involved in any bankruptcy, receivership or similar proceedings since inception nor have we been party to a reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. We have no intention of entering into a corporate merger or acquisition.

Business Development since Inception

There is no historical financial information about us upon which to base an evaluation of our performance as an exploration corporation. We are a pre-exploration stage company and have not generated any revenues from our exploration activities. Further, we have not generated any revenues since our formation on January 18, 2007. We cannot guarantee we will be successful in our exploration activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

To become profitable and competitive, we must first secure our ownership interest in the Lucky Thirteen Claim by making the requisite payments, then we must invest in the exploration of the Lucky Thirteen Claim before we can start production of any minerals we may find. We must obtain equity or debt financing to provide the capital required to fully implement our phased exploration program. We have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we will be unable to commence, continue, develop or expand our exploration activities. Even if available, equity financing could result in additional dilution to existing shareholders.

Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on the Lucky Thirteen Claim. That cash must be raised from other sources. Our only other source for cash at this time is investments by others in the Company. We must raise cash to implement our planned exploration program if it is not funded by our joint venture partner and stay in business.

To meet our need for cash we must raise additional capital. We have entered into a joint venture to raise the required capital to develop the Lucky Thirteen Claim which has been terminated. We will attempt to raise additional money through a private placement, public offering or through loans. We have discussed this matter with our officers and directors. However, our officers and directors are unwilling to make any commitments to loan us any money at this time. At the present time, we have not made any arrangements to raise additional cash. We require additional cash to continue operations. Such operations could take many years of exploration and would require expenditure of very substantial amounts of money, money we do not presently have and may never be able to raise. If we cannot raise it we will have to abandon our planned exploration activities and go out of business.

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We estimate we will require $258,875 in cash over the next twelve months, including the cost of completing the exploration work for the Lucky Thirteen claim during that period. For a detailed breakdown refer to "Liquidity and Capital Reserves".

We may attempt to interest other companies to undertake exploration work on the Lucky Thirteen Claim through joint venture arrangement or even the sale of part of the Lucky Thirteen Claim. Neither of these avenues has been pursued as of the date of this Form 10-K.

During the year we have no exploration work on the Lucky Thirteen Claim and we have terminated a joint venture in which the joint venture partner pays for 100% of the costs and receives 50% of the net profit as our joint venture partner has indicated that it will not be participating in the venture any further due to its inability to raise financing.

We do not intend to hire any employees at this time.

Trends

We are in the pre-explorations stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable future unless we place a property in production. We are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term of short term, other than as described in this section or in 'Risk Factors' on page 5.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.

The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and into the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Certain conditions, discussed below, currently exist which raise substantial doubt upon the validity of this assumption. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.

Liquidity and Capital Resources

As of July 31, 2013 our total assets were $Nil and our total liabilities were $183,830.

Not including the cost of completing the exploration phase of our Lucky Thirteen Claim, our non-elective expenses over the next twelve months, are expected to be as follows:

                                                                     Estimated
                            Expense                        Ref.       Amount

         Accounting and audit                              (i)      $   7,500
         Edgar filing fees                                 (ii)         6,000
         Filing fees - Nevada; Securities of State         (ii)           375
         Office and general expenses                       (iv)        61,000
         Estimated expenses for the next twelve months                 74,875

         Account payable as at July 31, 2013                          183,830
         Cash required for the next twelve months                   $ 258,875

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In order to continue to make property payments an additional $900,000 may be required during the year for property payments.

(i) Accounting and audit

We will have to continue to prepare consolidated financial statements for submission with the various 10-K and 10-Q as follows:

                   Period          Form      Accountant      Auditor     Amount

              October 31, 2013     10-Q           1,500          -        1,500
              January 31, 2014     10-Q           1,500          -        1,500
              April 30, 2014       10-Q           1,500          -        1,500
              July 31, 2014        10-K           3,000          -        3,000
              Estimated total               $     7,500     $    -      $ 7,500

(ii) Edgar filing fees

We will be required to file the annual Form 10-K estimated at $250 and the three Form 10-Qs at $250 each for a total cost of $1,000. Additional Form 8-K should cost an additional $1,000. The conversion costs to XBLR is estimated at $4,000.

(iii) Filing fees in Nevada

To maintain the Company in good standing in the State of Nevada an annual fee of approximately $375 has been paid to the Secretary of State.

(iv) Office and general

We have estimated a cost of approximately $25,000 for photocopying, printing, fax and delivery, travel, transfer agent and entertainment. Director Fees total $3,000 per month or $36,000. Total Office and General is estimated to be $61,000.

Our future operations are dependent upon our ability to obtain third party financing in the form of debt and equity and ultimately to generate future profitable operations or income from investments. As of July 31, 2013, we have not generated revenues, and have experienced negative cash flow from operations. We may look to secure additional funds through future debt or equity financings. Such financings may not be available or may not be available on reasonable terms.

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Twelve months ended July 31, 2013 and 2012

                                                Year ended         Year ended
  Expense                        Reference    July 31, 2013      July 31, 2012       Change
  Accounting and auditing                            22,050             22,080           (30 )
  Bank charges and interest                             205                532          (327 )
  Consulting                         (i)            172,000              9,000       163,000
  Management fees                   (ii)             49,000             36,000        13,000
  Legal                                                  -               6,817        (6,817 )
  Filing fees                                            -               4,665        (4,665 )
  News Releases                                         370              6,080        (5,710 )
  Office                                                 -                 430          (430 )
  Telephone                                             188                337          (149 )
  Interest                         (iii)             13,925              1,750        12,175
  Transfer agent's fees                                  -               1,653        (1,653 )
  Travel                                                600             14,159       (13,559 )
  TOTAL EXPENSES                                    258,338            103,503       154,835

(i) Consulting

During the year, one consultant, Norm Newsom was paid $120,000 as compensation for extensions from Peter Osha and providing consulting services to the Company. No formal extension documents were received from Peter Osha. Peter Osha was paid $50,000 for compensation for extending the terms of the Mineral Lease acquisition on Lucky 13. $2,000 was paid to the Markle group for providing edgarizing and news releases services. This has resulted in consulting fees increasing $163,000 over 2012 fees.

(iii) Management fees

For 8 months the Director was paid $5,000 per month. The previous Directors of the Company were paid $1,500 per month each during the 2012 year end until they resigned late in 2012. Consequently director fees increased $13,000 from 2013 over 2012.

(iv) Interest

Interest increased to $13,925 due to the interest earned on the Convertible Notes of $11,600 the balance was for the interest on the note payable.

Balance Sheets

Total cash and cash equivalents, as of July 31, 2013 was $Nil and $9,923 as at July 31, 2012. Our working capital deficiency as at July 31, 2013 was a $183,830 and as of July 31, 2012, $95,092.

Total stockholders' deficiency as of July 31, 2013 was $183,830 and $95,092 as at July 31, 2012. Total shares outstanding as at July 31, 2013 and 2012 was 45,105,000.

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