x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended September 30, 2007

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934

 

For the transition period from _____ to _____

Commission File Number: 000-51197

STARGOLD MINES, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada		98-0400208
(State of incorporation)		(IRS Employer ID Number)

 

1840 Gateway Drive

Suite 200

San Mateo, California 94404

(Address of principal executive offices)

(604) 673-8427

(Issuer's telephone number)

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES x NO o

Number of shares of common stock outstanding as of November 15, 2007: 41,219,311shares of common stock.

Transitional Small Business Format  Yes o No x

 

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TABLE OF CONTENTS

Item 1. Financial Statements
Item 2. Management’s Discussion and Analysis or Plan of Operation
Item 3 Controls and Procedures
PART II
Item 6. Exhibits

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

 

STARGOLD MINES, INC.

(FORMERLY SOCKEYE SEAFOOD GROUP INC.)

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED FINANCIAL STATEMENTS

 

THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

 

UNAUDITED

 

CONTENTS

Condensed Balance Sheet	1
Condensed Statements of Operations	2
Condensed Statements of Cash Flows	3
Notes to Condensed Financial Statements	4 - 9

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STARGOLD MINES, INC.

(FORMERLY SOCKEYE SEAFOOD GROUP INC.)

(A DEVELOPMENT STAGE COMPANY)

Condensed Balance Sheet

September 30, 2007

Unaudited

ASSETS
Current
Cash		$	6,990
Prepaid expenses			87,515
Total Current Assets			94,505
Loan Receivable (note 3)			961,585
Total Assets		$	1,056,090
LIABILITIES
Current
Accounts payable		$	28,500
Loan payable (note 4)			100,042
Total Current Liabilities			128,542
Total Liabilities			128,542
Contingency (note 7)
STOCKHOLDERS' EQUITY
Capital Stock (note 5)
Authorized
1,000,000,000 common stock,
par value $0.0001 per share
Issued and outstanding
41,219,311 common stock			4,122
Additional Paid-in Capital			1,551,698
Accumulated Other Comprehensive Loss			(237,415	)
Deficit Accumulated During the Development Stage			(390,857	)
Total Stockholders' Equity			927,548
Total Liabilities and Stockholders' Equity		$	1,056,090

 

(The accompanying notes are an integral part of these condensed financial statements.)

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STARGOLD MINES, INC.

(FORMERLY SOCKEYE SEAFOOD GROUP INC.)

(A DEVELOPMENT STAGE COMPANY)

Condensed Statements of Operations

Three Months and Nine Months Ended September 30, 2007,

and 2006 and the Period from Date of Inception (May 21, 2003)

through to September 30, 2007

Unaudited

		Three Months Ended |2007			Three Months Ended 2006			Nine Months Ended 2007			Nine Months Ended 2006			Period from Date of Inception (May 21, 2003) through to September 30, 2007
Revenue		$	-		$	-		$	-		$	3,822		$	68,739
Cost of Sales			-			-			-			3,260			60,508
Gross Profit			-			-			-			562			8,231
Expenses
Professional fees			155,174			2,200			203,577			4,200			248,404
Office and general			30,488			55			44,637			140			49,669
Salary and benefits			20,000			-			60,000			-			60,000
Consulting fees			-			-			20,000			-			20,000
Bad debt			-			-			-			-			26,915
Total Expenses			205,662			2,255			328,214			4,340			404,988
Operating Loss			(205,662	)		(2,255	)		(328,214	)		(3,778	)		(396,757	)
Debt forgiveness			-			-			-			-			5,900
Other income			-			305			-			305			-
Net Loss			(205,662	)		(1,950	)		(328,214	)		(3,473	)		(390,857	)
Unrealized loss of investment			(237,415	)		-			(237,415	)		-			(237,415	)
Comprehensive Loss		$	(443,077	)	$	(1,950	)	$	(565,629	)	$	(3,473	)	$	(628,272	)
Loss per Share
Basic and Diluted		$	0.00		$	0.00		$	0.00		$	0.00
Basic and Diluted Weighted Average Number of Common Shares Outstanding During the Period			41,219,311			80,000,000			66,184,327			80,000,000

 

(The accompanying notes are an integral part of these condensed financial statements.)

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STARGOLD MINES, INC.

(FORMERLY SOCKEYE SEAFOOD GROUP INC.)

(A DEVELOPMENT STAGE COMPANY)

Condensed Statements of Cash Flows

Nine Months Ended September 30, 2007, and 2006 and

Cumulative for the Period from the Date of Inception

(May 21, 2003) through to September 30, 2007

Unaudited

		2007			2006			Period from the Date of Inception (May 21, 2003) through to September 30, 2007
Cash Flows from Operating Activities
Net loss		$	(328,214	)	$	(3,473	)	$	(390,857	)
Adjustments to reconcile non-cash items:
Issuance of common stock for services			2,500			-			2,500
Prepaid expenses			(87,515	)		-			(87,515	)
Accounts payable			3,218			(89	)		28,500
Net Cash Flows Used in Operating Activities			(410,011	)		(3,562	)		(447,372	)
Cash Flows from Investing Activities
Loan receivable			(199,000	)		-			(1,199,000	)
Net Cash Flows Used in Investing Activities			(199,000	)		-			(1,199,000	)
Cash Flows from Financing Activities
Issuance of common stock and warrants			508,320			-			1,553,320
Advance from related party			(240	)		-			-
Loan payable			100,042			2,000			100,042
Net Cash Flows Provided by Financing Activities			608,122			2,000			1,653,362
Net (Decrease) Increase in Cash			(889	)		(1,562	)		6,990
Cash - Beginning of Period			7,879			10,158			-
Cash - End of Period		$	6,990		$	8,596		$	6,990
Supplemental Disclosure of Cash Flow Information During the periods, the Company had no cash flows arising from interest and income taxes paid.

 

(The accompanying notes are an integral part of these condensed financial statements.)

 

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1. Description of Business and Going Concern

 

a)

Description of Business

 

Stargold Mines, Inc. (the "Company"), formerly Sockeye Seafood Group Inc., (Sockeye Seafood Group Inc. merged with its wholly-owned subsidiary Stargold Mines, Inc. on November 23, 2006 and changed its name to Stargold Mines, Inc.) was incorporated under the laws of the State of Nevada on May 21, 2003. The Company was formed to engage in the business of procuring and marketing seafood products direct from Pacific Northwest First Nations organizations to North American and international wholesalers, distributors, and retailers.

 

The Company's operations have been limited to general administrative operations, purchasing a limited amount of sample inventory, minimal sales and establishing its website. The Company is considered a development stage company in accordance with Statement of Financial Accounting Standards ("SFAS") No. 7 "Accounting and Reporting by Development Stage Enterprises". The Company is currently working on acquiring licenses to develop and extract natural resources in the Siberian and Far Eastern Districts of Russia.

 

b)

Going Concern

 

The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America with the assumption that the Company will be able to realize its assets and liabilities in the normal course of business. The Company has experienced recurring losses since inception and has negative cash flows from operations that raise substantial doubt as to its ability to continue as a going concern. For the period ended September 30, 2007, the Company experienced a net loss of $328,214 and has a deficit accumulated during the development stage of $390,857 at September 30, 2007.

 

The Company's ability to continue as a going concern is contingent upon its ability to secure additional financing and attaining profitable operations.

 

Management is pursuing various sources of equity financing. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or obtain such on terms satisfactory to the Company, if at all.

 

The accompanying condensed financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern.

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2. Summary of Significant Accounting Policies

 

a)

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10 QSB. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for a full year. There have been no significant changes of accounting policies since December 31, 2006. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report for the fiscal year ended December 31, 2006.

 

b)

Recent Accounting Pronouncements

 

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long term measurement objectives for accounting for financial instruments. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. This statement does not establish requirements for recognizing and measuring dividend income, interest income, or interest expense. This statement does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in FASB Statements No. 157, “Fair Value Measurements”, and No. 107, “Disclosures about Fair Value of Financial Instruments.” This statement is effective as of the beginning of the entity’s first fiscal year that begins after November 15, 2007. The Company is currently reviewing the effect, if any, the proposed guidance will have on its financial statements.

 

In May 2007, the FASB issued a FASB Staff Position on FIN 46(R)-7, "Application of FASB Interpretation No. 46(R) to Investment Companies" ("FSP FIN 46 (R)-7"). FSP FIN 46(R)-7 addresses the application of FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities", by an entity that accounts for its investments in accordance with the specialized accounting guidance in the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide, "Investment Companies" (the “Guide”). The adoption of FSP FIN 46(R)-7 did not have a material impact on the Company's results of operations and financial condition.

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2. Summary of Significant Accounting Policies (cont'd)

 

b)

Recent Accounting Pronouncements (cont'd)

 

In May 2007, the FASB issued FASB Interpretation FIN No. 48-1, “Definition of Settlement in FASB Interpretation 48” (“FIN 48-1”). FIN 48-1 amends FIN 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”, to provide guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. FIN 48-1 is effective retroactively to January 1, 2007. The adoption of FIN 48-1 did not have a material effect on the Company’s condensed financial statements.

 

In June 2007, the AICPA issued Statement of Position ("SOP") No. 07-1, ''Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies" (“SOP No. 07-1”). SOP No. 07-1 clarifies when an entity may apply the provisions of the Guide. Investment companies that are within the scope of the Guide report investments at fair value; consolidation or use of the equity method for investments is generally not appropriate. SOP No. 07-1 also addresses the retention of specialized investment company accounting by a parent company in consolidation or by an equity method investor. SOP No. 07-1 is effective for fiscal years beginning on or after December 15, 2007 with early adoption encouraged. The Company is currently evaluating the impact, if any of SOP No. 07-1 on the Company’s condensed financial statements.

 

In September 2007, the FASB published Proposed FASB Staff Position ("FSP") No. APB 14-a, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion.” The proposed FSP applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under SFAS No.133. Convertible debt instruments within the scope of the proposed FSP are not addressed by APB 14. Therefore, the liability and equity components of convertible debt instruments within the scope of the proposed FSP shall be separately accounted for in a manner that will reflect the entity’s nonconvertible debt borrowing rate. This will require an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component would be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. The proposed FSP is expected to be effective for fiscal years beginning after December 15, 2007 and will require retrospective application. The Company is currently reviewing the effect, if any, if the proposed FSP were to be adopted.

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3.	Loan Receivable

 

The loan receivable from UniverCompany Limited Liability Company, a Russian limited liability society ("UniverCompany"), is non-interest bearing, unsecured and has no specified terms for repayment, and has face value of $1,199,000. The fair value of the loan was determined to be $961,585, estimated based on a collection period of 2 years, using interest rate of 11%. Unrealized loss has been reported in other comprehensive loss.

 

4.	Loan Payable

 

The loan payable to Blue Water Partners bears interest at prime plus 1% per annum beginning October 31, is unsecured and has no specified terms of repayment.

 

5.	Capital Stock

 

On November 23, 2006, the Company implemented a one for forty (1:40) forward stock split and increased its authorized shares of common stock on a corresponding basis. The 2006 comparative number of shares have been retroactively adjusted to give effect to the stock split.

 

On December 19, 2006 the Company issued 1,000,000 units of the Company's securities, each unit consisting of one share of common stock and one share purchase warrant for total proceeds of $1,000,000. Each warrant is exercisable for one share of common stock at an exercise price of $2.50 for two years from the date of issuance. Due to the substantial difference between market value and exercise price no value has been attributed to the warrants.

 

In March 2007, the Company issued 25,000 shares for services valued at $2,500.

 

In March 2007, the Company issued 83,200 shares for cash of $8,320.

 

In May 2007, the Company issued 111,111 shares by way of the sale of 111,111 units of the Company's securities. Each unit consists of one share of common stock and one half Class A Warrant. Each Class A Warrant is exercisable for one share of common stock at an exercise price of $7.00 for 2 years from the date of issuance. The units were issued for cash of $406,112 for the common shares and $93,888 for the Class A Warrants.

 

In June 2007, the Company cancelled 40,000,000 issued common shares that were held by former directors.

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6.	Income Taxes

 

The Company accounts for income taxes pursuant to SFAS No. 109. This standard prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated.

Under SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.

The current provision for income taxes has been computed as follows:

Expected income tax recovery at the statutory rate - 31%		$	(103,059	)
Valuation allowance			103,059
Current provision for income taxes			-

The Company has tax losses available to be applied against future years' income. Due to the losses incurred in the current period and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carryforward will not be realized through the reduction of future income tax payments, accordingly a 100% valuation allowance has been recorded for the current income taxes and deferred income tax assets.

The Company has deferred income tax assets as follows:

Net operating loss carryforward		$	122,730
Valuation allowance for deferred income tax assets			(122,730	)
Deferred income tax assets		$	-

 

As of September 30, 2007, the Company had $390,857 of Federal and state net operating loss carryforwards available to offset future taxable income. The Company has the following losses which expire in 20 years from the date the loss was incurred:

 

Expiry 2023		$	1,728
Expiry 2024			4,513
Expiry 2025			5,676
Expiry 2026			50,726
Expiry 2027			328,214
		$	390,857

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7.	Contingency

 

On November 30, 2006, the Company entered into a stock purchase agreement with UniverCompany and agreed to purchase from shareholders of UniverCompany 100% of the issued and outstanding shares of common stock of UniverCompany. In consideration therefore, the Company will issue to the shareholders of UniverCompany 15,000,000 shares of the Company's common stock.

 

The acquisition is currently going through the legal procedures required by Russian legislation, and the title did not pass to the Company as of the period end. Shares will be issued when the transaction is approved by the Russian authorities.

 

8.	Restatement

 

 

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Item 2. Management’s Discussion and Analysis or Plan of Operations.