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

FORM 10-Q  


( Mark one)
x
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 
 ACT OF 1934
For the Quarterly Period Ended January 31, 2013
Or
o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 
 ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number: 000-53861
AURUM, INC.
(Exact name of registrant as specified in its charter)

Delaware
27-1728996
(State or Other Jurisdiction
(I.R.S. Employer
of Incorporation)
Identification No.)
   
Level 8, 580 St Kilda Road
 
Melbourne, Victoria, Australia
3004
(Address of Principal Executive Offices)
(Zip Code)
   
Registrant’s telephone number, including area code: 001 (613) 8532 2800
 
 
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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x   Yes    ¨   No
 
Indicate by check mark whether the registrant 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   x Yes   o   No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.
 
(Check one):       Large accelerated filer  o    Accelerated filer  o    Non-accelerated filer  o      Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).      o   Yes   x   No
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 105,600,000 outstanding shares of Common Stock as of March 15, 2013.
 
 
 
 
 
 
 
 
 
Table Of Contents

 
17
     
 
18
     
Exh. 31.1
Certification
19
Exh. 31.2
Certification
20
Exh. 32.1
Certification
21
Exh. 32.2
Certification
22


 
1
 



Item 1.
FINANCIAL STATEMENTS

Introduction to Interim Financial Statements.

The interim financial statements included herein have been prepared by Aurum, Inc. (“Aurum” or the “ Company ”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (The “Commission”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles in United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2012.

In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the financial position of the Company as of January 31, 2013, the results of its operations for the three month periods ended January 31, 2013 and January 31, 2012 and for the cumulative period September 29, 2008 (inception) through January 31, 2013, and the changes in its cash flows for the three month periods ended January 31, 2013 and January 31, 2012 and for the cumulative period September 29, 2008 (inception) through January 31, 2013, have been included.  The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
 
 
 
 
2
 
 
AURUM, INC.
(An Exploration Stage Company)
Balance Sheet
 
   
January 31, 2013
US$
(unaudited)
   
October 31, 2012
US$
 
             
ASSETS
           
             
Current Assets:
           
Cash
    8,238       18,721  
Receivables
    15,527       14,760  
Prepayments
    32,504       24,298  
Total Current Assets
    56,269       57,779  
                 
Non-Current Assets:
               
Property and equipment (Note 3)
    20,251       28,841  
Total Non-Current Assets
    20,251       28,841  
                 
Total Assets
    76,520       86,620  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
Current Liabilities:
               
Accounts payable and accrued expenses
    152,950       162,670  
Total Current Liabilities
    152,950       162,670  
                 
Non-Current Liabilities:
               
Advances from affiliates (Note 4)
    7,083,331       6,630,197  
Total Non-Current Liabilities
    7,083,331       6,630,197  
                 
Total Liabilities
    7,236,281       6,792,867  
                 
Stockholders’ Equity (Deficit) :
               
Common stock: $.0001 par value
500,000,000 shares authorised, and
105,600,000 shares issued and outstanding at
January 31, 2013 and October 31, 2012.
    10,560       10,560  
Additional Paid-in-Capital
    2,739,823       2,663,669  
Retained (Deficit) during exploration stage
    (9,820,135 )     (9,290,467 )
Retained (Deficit) prior to exploration activities
    (90,009 )     (90,009 )
Total Stockholders’ Equity (Deficit)
    (7,159,761 )     (6,706,247 )
                 
Total Liabilities and Stockholders’ Equity (Deficit)
    76,520       86,620  
                 
See Notes to Financial Statements
               
 
 
 
3
 

 
AURUM, INC.
(An Exploration Stage Company)
Statements of Operations
(Unaudited)
 
   
For the three
months ended
January 31, 2013
   
For the three
months ended
January 31, 2012
   
For the period
from inception
September 29, 2008 to
January 31, 2013
 
   
US$
   
US$
   
US$
 
                   
Revenues
  $ -     $ -     $ -  
                         
Costs and expenses:
                       
Legal, accounting and professional
    8,810       17,610       233,011  
Administration expenses
    66,696       125,027       833,196  
Consultants salaries - stock based compensation
    76,154       281,205       2,728,783  
Exploration expenditure
    321,892       578,356       5,758,806  
Donations
    -       -       100,000  
Interest expense
    1,215       -       1,229  
Total costs and expenses
    474,767       1,002,198       9,655,025  
                         
(Loss) from operations
    (474,767 )     (1,002,198 )     (9,655,025 )
Foreign currency exchange gain (loss)
    (54,901 )     14,248       (254,653 )
Other income - interest
    0       1       134  
(Loss) before income taxes
    (529,668 )     (987,949 )     (9,909,544 )
Provision for income taxes
    -       -       -  
                         
Net (loss)
    (529,668 )     (987,949 )     (9,909,544 )
                         
Basic and diluted net (loss) per common equivalent shares
    (0.01 )     (0.01 )     (0.09 )
                         
Weighted average number of common equivalent shares (in 000’s)
    105,600       105,600       104,523  
                         
See Notes to Financial Statements
                       

 
 
4
 

AURUM, INC.
(An Exploration Stage Company)
Statements of Stockholders’ Equity (Deficit)
(Unaudited)
 
   
 
 
Shares
   
Common
Stock
Amount
   
Additional
Paid-in
Capital
   
Retained
(Deficit)
during
exploration
stage
   
Retained
(Deficit)
prior to
exploration
activities
   
 
Total
 
         
US$
   
US$
   
US$
   
US$
   
US$
 
                                     
Inception, September 29, 2008
    -       -       -       -       -       -  
                                                 
Issuance of shares
    96,000,000       9,600       -       -       (600 )     9,000  
                                                 
Net (loss)
    -       -       -       -       (12 )     (12 )
                                                 
Balance, October 31, 2008
    96,000,000       9,600       -       -       (612 )     8,988  
                                                 
Issuance of shares
    9,600,000       960       11,040       -       -       12,000  
                                                 
Net (loss)
    -       -       -       -       (89,397 )     (89,397 )
 
Balance, October 31, 2009
    105,600,000       10,560       11,040       -       (90,009 )     (68,409 )
                                                 
Net (loss)
    -       -       -       (981,396 )     -       (981,396 )
 
Balance, October 31, 2010
    105,600,000       10,560       11,040       (981,396 )     (90,009 )     (1,049,805 )
                                                 
Amortization of 3,250,000 options under  2010 equity incentive plan
    -       -       2,005,676       -       -       2,005,676  
                                                 
Net (loss)
    -       -       -       (4,777,291 )     -       (4,777,291 )
 
Balance, October 31, 2011
    105,600,000       10,560       2,016,716       (5,758,687 )     (90,009 )     (3,821,420 )
                                                 
Amortization of 3,250,000 options under  2010 equity incentive plan
    -       -       646,953       -       -       646,953  
                                                 
Net (loss)
    -       -               (3,531,780 )     -       (3,531,780 )
 
Balance, October 31, 2012
    105,600,000       10,560       2,663,669       (9,290,467 )     (90,009 )     (6,706,247 )
                                                 
Amortization of 3,250,000 options under  2010 equity incentive plan
    -       -       76,154       -       -       76,154  
Net (loss)
    -       -               (529,668 )     -       (529,668 )
 
Balance, January 31, 2013
    105,600,000       10,560       2,739,823       (9,820,135 )     (90,009 )     (7,159,761 )
                                                 
                                                 
See Notes to Financial Statements
 

 
 
5
 

AURUM, INC.
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited)
 
   
Three
months
ended
January 31, 2013
US$
   
Three
months
ended
January 31, 2012
US$
   
For the
period from
inception
September 29, 2008 to
January 31, 2013
US$
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
 
Net (loss)
    (529,668 )     (987,949 )     (9,909,544 )
                         
Adjustments to reconcile net (loss) to net cash (used)
                       
in operating activities:
                       
Consultants options issued for stock based compensation
    76,154       281,205       2,728,783  
Foreign currency exchange (gain) loss
    54,901       (14,248 )     252,636  
Depreciation
    8,590       10,764       86,204  
Net change in:
                       
  Prepayments
    (8,207 )     12,786       (32,504 )
  Receivables
    (767 )     (9,544 )     (15,527 )
  Accounts payable and accrued expenses
    (9,720 )     (48,419 )     152,950  
                         
Net Cash (Used) in Operating Activities
    (408,717 )     (755,405 )     (6,737,002 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
                         
Purchase of property and equipment
    -       -       (106,455 )
Option fees paid
    -               -  
                         
Net Cash (Used) in Investing Activities
    -       -       (106,455 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
                         
Proceeds from issuance of stock
    -       -       21,000  
Borrowings from affiliates
    398,829       762,815       6,814,180  
                         
Net Cash Provided by Financing Activities
    398,829       762,815       6,835,180  
                         
Effect of exchange rate  on cash
    (595 )     (1,070 )     16,515  
                         
Net increase/(decrease) in cash
    (10,483 )     6,340       8,238  
                         
Cash at beginning of period
    18,721       10,133       -  
                         
Cash at end of period
    8,238       16,473       8,238  
 
Supplemental Disclosures
Interest Paid
      1,215       -       1,229  
 
See Notes to Financial Statements
 
 
6
 
 
AURUM, INC.
(An Exploration Stage Company)
Notes to Financial Statements
January 31, 2013
(unaudited)
 
(1)
ORGANIZATION AND BUSINESS
 
Aurum, Inc. ("Aurum” or the “Company") is a Delaware corporation, originally incorporated in Florida as Liquid Financial Engines, Inc. The principal stockholder of Aurum is Golden Target Pty Ltd., an Australian corporation (“Golden”), which owned 96.21% of Aurum as of January 31, 2013.
 
On January 20, 2010, the Company re-incorporated in the state of Delaware (the “Reincorporation”) through a merger involving Liquid Financial Engines Inc. (“Liquid”) and Aurum, Inc., a Delaware Corporation that was a wholly owned subsidiary of Liquid. The Reincorporation was effected by merging Liquid with Aurum, with Aurum being the surviving entity. For financial reporting purposes Aurum is deemed a successor to Liquid.
 
In July 2009, Golden acquired a 96% interest in Aurum from certain stockholders. In connection therewith, the Company appointed a new President/Chief Executive Officer and Chief Financial Officer/Secretary and a new sole Director. The sole director and stockholder of Golden is also the President of the Company.
 
Commencing August 2009, the Company decided to focus on mineral exploration for gold and copper in the Lao Peoples Democratic Republic (Lao P.D.R or Laos). The Company’s is considered to be in the exploration stage.
 
In December 2010, the Company executed a Management and Shareholders Agreement with Argonaut Overseas Investments Ltd (“AOI”), an indirectly wholly owned Subsidiary of Argonaut Resources N.L., in respect to Argonaut’s 70% held Century Concession in Laos.
 
The agreement appoints Aurum as the manager of the Century Thrust Joint Venture Agreement (“Joint Venture”) and the Company has the right to earn 72.86% of AOI’s interest in the Joint Venture which is equivalent to a 51% beneficial interest in the Century Concession. In order to acquire this interest, Aurum may be required to spend US$6.5 million on exploration within five years.
 
On February 10, 2011, the Company entered into a Deed of Agreement with the shareholders of the Lao Inter Mining Options Ltd (“LIMO”) which granted Aurum an option to purchase LIMO’s 20% interest in the Joint Venture. This Agreement, in conjunction with the Management and Shareholders Agreement with AOI enabled Aurum to acquire, at its option, a 71% beneficial interest in the Century Concession. On October 24, 2011, the Company executed a Deed of Variation of Call Option extending the exercise date of Option to April 24, 2012, for a consideration of $55,000 for each month extended (see note 14). In April, 2012, the Company decided not to exercise the option to purchase 20% of the Joint Venture.
 
The Company’s ability to continue operations through the remainder of 2013 is dependent upon future funding from affiliated entities, capital raisings, or its ability to commence revenue producing operations and positive cash flows.
 
(2)
RECENT ACCOUNTING PRONOUNCEMENTS
 
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
 
7
 
 
(3)
PROPERTY AND EQUIPMENT
 
Property and equipment is stated at cost. The Company records depreciation and amortization, when appropriate, using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriate accounts and the resultant gain or loss is included in net income (loss).
 
         
At January 31, 2013
   
At October 31, 2012
 
   
Depreciable
Life
(in years)
   
Cost
$
   
Accumulated
 Depreciation
$
   
Net
Book
Value
$
   
Cost
$
   
Accumulated
Depreciation
$
   
Net
Book
Value
$
 
Office Equipment
  1-2       3,830       (3,830 )     -       3,830       (3,830 )     -  
Computer Equipment
  1-3       101,975       (81,811 )     20,164       101,975       (73,303 )     28,672  
Furniture
  1-2       650       (563 )     87       650       (481 )     169  
              106,455       (86,204 )     20,251       106,455       (77,614 )     28,841  

 
The depreciation expense for the three months ended January 31, 2013 amounted to $8,590 and for the three months ended January 31, 2012 amounted to $10,764.
 
(4)
AFFILIATE TRANSACTIONS
 
The Company entered into an agreement with AXIS Consultants Pty Ltd (“AXIS”) to provide management and administration services to the Company. AXIS is affiliated through common management. The Company is one of ten affiliated companies to which AXIS provides services. Each of the companies has some common Directors, officers and shareholders. Currently, there are no material arrangements or planned transactions between the Company and any of the affiliated companies other than AXIS.
 
During the three months ended January 31, 2013, AXIS provided services in accordance with the services agreement, incurred direct costs on behalf of the Company and provided funding of $445,634, in addition to the Manager of the Laos operations advancing the Company $7,500. The amounts owed to affiliates as of January 31, 2013 and October 31, 2012 was $7,083,331 and $6,630,197 respectively and are reflected in non-current liabilities - advance from affiliates. Included in these amounts is $181,000 and $173,500 respectively being funds advanced by the Manager of the Laos operations. During the three months ended January 31, 2013 and 2012, the affiliates have agreed not to charge interest.
 
The Company intends to repay these amounts with funds raised either via additional debt or equity offerings. Both affiliates have agreed not to call the advance within the next twelve months and accordingly the Company has classified the amounts payable as non-current in the accompanying balance sheet.
 
(5)
GOING CONCERN
 
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of Aurum as a going concern. Aurum has incurred net losses since inception and may continue to incur substantial and increasing losses for the next several years, all of which raises substantial doubt as to its ability to continue as a going concern.
 
In addition, Aurum is reliant on loans and advances from corporations affiliated with the President of Aurum. Based on discussions with these affiliate companies, Aurum believes this source of funding will continue to be available. Other than the arrangements noted above, Aurum has not confirmed any other arrangement for ongoing funding. As a result Aurum may be required to raise funds by additional debt or equity offerings in order to meet its cash flow requirements during the forthcoming year.
 
The retained deficit of the Company from inception (September 2008) through January 31, 2013 amounted to approximately $9.9 million .
 
(6)
INCOME TAXES
 
Aurum files its income tax returns on an accrual basis.
 
The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of FASB ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of January 31, 2013, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
 
 
 
8
 
 
The Company is required to file tax returns in the United States. The Company has available net operating loss carry forwards which are subject to limitations aggregating approximately US$1,405,000 which would expire in years 2028 through 2031.
 
The Company’s tax returns for all years since 2009 remain open to examination by the respective tax authorities.  There are currently no tax examinations in progress.
 
(7)
STOCKHOLDERS’ EQUITY
 
In September 2008, 96,000,000 shares of common stock were issued to the Company’s founder raising $9,000.
 
In March 2009, the Company raised $12,000 in a registered public offering of 9,600,000 shares of common stock share pursuant to a prospectus dated January 30, 2009.
 
On September 29, 2009 the Company’s Board of Directors declared an 8-for-1 stock split in the form of a stock dividend that was payable in October 2009 to stockholders of record as of October 23, 2009. The Company has accounted for this bonus issue as a stock split and accordingly, all share and per share data has been retroactively restated.
 
(8)
ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN
 
 
(i)
Effective December 13, 2010, the Company issued 2,500,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 on December 13, 2010, 1/3 vested on November 17, 2011 and the balance vested on November 17, 2012. The exercise price of the options is US$1.00 and the latest exercise date for the options is November 17, 2020.
 
The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model.
 
An external consultant has calculated the fair value of the 2,500,000 options using the Binomial valuation method using the following inputs:
 
Grant date
 
 
Dec 13, 2010
   
Dec 13, 2010
   
Dec 13, 2010
 
Grant date share price
    US$1.10       US$1.10       US$1.10  
Vesting date
 
Dec 13, 2010
   
Nov 17, 2011
   
Nov 17, 2012
 
Expected life in years
    4.5       5.0       5.5  
Risk-free rate
    1.91%       1.91%       1.91%  
Volatility
    95%       95%       95%  
Exercise price
    US$1.00       US$1.00       US$1.00  
Call option value
    US$0.78       US$0.81       US$0.83  

   
Options
   
Option Price
Per Share
US$
   
Weighted
Average
Exercise Price
US$
 
Outstanding at November 1, 2010
    -       -       -  
Granted
    2,500,000       1.00       1.00  
Forfeited
    -       -       -  
Outstanding at October 31, 2012 and January 31, 2013
    2,500,000       1.00       1.00  
 
 
 
9
 
 
The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.81 and the weighted average remaining contractual life of those options is 7 ¾ years. At January 31, 2013 there are 2,500,000 options exercisable.
 
For the three months ended January 31, 2013, the amortization amounted to $40,686.
 
 
(ii)
In May 2011, the Company issued 750,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 upon grant date, 1/3 vested on February 1, 2012 and the balance will vest on February 1, 2013. The exercise price of the options is US$1.00 and the latest exercise date for the options is February 1, 2018.
 
The Company has accounted for all options issued based upon their fair market value using the Binomial pricing model.
 
An external consultant has calculated the fair value of the 750,000 options using the Binomial valuation method using the following inputs:
 
Grant date
 
 
May 1, 2011
   
May 1, 2011
   
May 1, 2011
 
Grant date share price
  $ US$1.30     $ US$1.30       US$1.30  
Vesting date
 
May 1, 2011
   
Feb 1, 2012
   
Feb 1, 2013
 
Expected life in years
    3.5       4.0       4.5  
Risk-free rate
    2.02 %     2.02 %     2.02 %
Volatility
    100 %     100 %     100 %
Exercise price
  $ US1.00     $ US1.00     $ US1.00  
Call option value
  $ US0.91     $ US0.95     $ US0.99  

   
Options
   
Option Price
Per Share
US$
   
Weighted
Average
Exercise Price
US$
 
Outstanding at November 1, 2010
    -       -       -  
Granted
    750,000       1.00       1.00  
Forfeited
    -       -       -  
Outstanding at October 31, 2012 and January 31, 2013
    750,000       1.00       1.00  
 
The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.95 and the weighted average remaining contractual life of those options is 5 years. At January 31, 2013 there are 500,000 options exercisable.
 
The total value of the outstanding unvested options equates to $386 and is being amortised over the vesting periods.
 
For the three months ended January 31, 2013, the amortization amounted to $35,468.
 
(9)
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The Company’s financial instruments consist of cash, receivables, accounts payable, accrued expenses and advances from affiliate. The carrying amounts of cash, receivables and payables approximates its fair values because of the short term maturities of those instruments. The fair value of advances from affiliate is not readily determinable as no similar market exists for these instruments and it doesn’t have a specified date of repayment.
 
 
 
10
 
 
(10)
EXPLORATION STAGE COMPANY
 
As a result of the Company’s focus on mineral exploration, it is considered an exploration stage company and accordingly reports operations, stockholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations. Since inception, the Company has incurred an operating loss of approximately $9.9 million. The Company’s working capital has been primarily generated through the sales of common stock as well as advances from an affiliated entity.
 
(11)
NET LOSS PER SHARE
 
Basic income (loss) per share is computed by dividing net profit (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. Options to acquire 3,000,000 shares of common stock were not included in the diluted weighted average shares outstanding as such effects would be anti-dilutive.
 
(12)
CASH
 
The Company maintains cash deposits with financial institutions in Australia and in Laos (USD).  Cash deposits maintained in Australian dollars are translated into US dollars at the period end exchange rate with the related adjustment recognized in statements of operations.
 
(13)
COMMITMENTS
 
Pursuant to the Century Thrust Joint Venture Agreement (Joint Venture), the Company may fund up to $6.5 million in exploration   expenditure, of which $3.47 million has already been funded, in order to acquire a 51% beneficial interest in the Joint Venture. Should Aurum wish to execute its rights under the agreement, it may be required to expend an additional $3.03 million on the Century Thrust Concession (see note 1). All such exploration costs are being expensed as incurred.
 
(14)
OPTION AGREEMENT
 
Pursuant to the LIMO Deed, as amended, the Company has paid Option Fees of $405,000, along with associated costs of $20,000.
 
The Company had 60 days from the date of the last option payment to exercise the option to purchase 20% of the Joint Venture for $1.35 million, inclusive of the option fees of $405,000. On October 24, 2011, the Company executed a Deed of Variation of Call Option extending the exercise date of Option to April 24, 2012, for a consideration of $55,000 each month extended. The Company did not exercise the option to purchase 20% of the Joint Venture on April 24, 2012 and accordingly $425,000 of prepaid option fees have been expensed (see note 1).
 
(15)
SUBSEQUENT EVENTS
 
The Company has evaluated significant events subsequent to the balance sheet date through the date the financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements, other than noted herein.

 
11
 
 
 
General
 
The following discussion and analysis of our financial condition and results of operation should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this report. This report contains numerous forward-looking statements relating to our business. Such forward-looking statements are identified by the use of words such as believes, intends, expects, hopes, may, should, plan, projected, contemplates, anticipates or similar words. Actual operating schedules, results of operations and other projections and estimates could differ materially from those projected in the forward-looking statements.
 
Overview
 
Aurum, Inc. is an exploration stage company and was incorporated in Florida on September 29, 2008, to develop and market financial software. In July 2009, Golden Target Pty Ltd, an Australian corporation ("Golden") acquired a 96% interest in Aurum from Daniel McKelvey and certain other stockholders. Commencing August 2009, the Company decided to focus on mineral exploration for gold and copper in the Lao Peoples Democratic Republic. The Company is considered to be in the exploration stage. On January 20, 2010, the Company re-incorporated in the state of Delaware through a merger involving Liquid Financial Engines Inc. and Aurum, Inc., with Aurum being the surviving entity.
 
In December 2010, the Company executed a Management and Shareholders Agreement with Argonaut Overseas Investments Ltd (“AOI”), an indirectly wholly owned Subsidiary of Argonaut Resources N.L., in respect to Argonaut’s 70% held, 55,105 acre Century Concession in Laos.
 
The agreement appoints Aurum as the manager of the Century Thrust Joint Venture Agreement, which currently exists between Argonaut and two other parties, and the Company has the right to earn 72.86% of AOI’s interest in the Joint Venture which is equivalent to a 51% beneficial interest in the Century Concession. In order to acquire this interest, Aurum may spend US$6.5 million on exploration within five years.
 
On February 10, 2011, the Company entered into a Deed of Agreement with the shareholders of the Lao Inter Mining Options Ltd (“LIMO”) which granted Aurum an option to purchase LIMO’s 20% interest in the Joint Venture. This Agreement, in conjunction with the Management and Shareholders Agreement with AOI, enabled Aurum to acquire, at its option, a 71% beneficial interest in the Century Concession. In August 2011, the Company made the last option payment of $135,000. The Company had 60 days from the date of the last option payment to exercise the option to purchase 20% of the Joint Venture for $1.35 million, inclusive of the previously paid option fees of $405,000. On October 24, 2011, the Company executed a Deed of Variation of Call Option, extending the exercise date of the Option to April 24, 2012, for consideration of $55,000 for each month extended. The Company did not exercise the option due to delays in acquiring assay results and the time required to adequately assess the program.
 
We have incurred net losses since our inception and may continue to incur substantial and increasing losses for the next several years. Since inception (September 2008), we have incurred accumulated losses of approximately $9.9 million which was funded primarily by the sale of equity securities and advances from affiliates.

 
12
 
 
RESULTS OF OPERATIONS
 
Three Months Ended January 31, 2013 vs. Three Months Ended January 31, 2012.
 
Costs and expenses decreased from $1,002,198 in the three months ended January 31, 2012 to $474,767 in the three months ended January 31, 2013. The decrease in costs and expenses is a net result of:
 
 
a)
a decrease in legal, accounting and professional expense from $17,610 for the three months ended January 31, 2012 to $8,810 for the three months ended January 31, 2013, primarily as a result of a decrease in legal fees. In the three months ended January 31, 2012, the Company incurred legal fees relating to the Century Thrust Joint Venture Agreement that have not been incurred for the three months ending January 31, 2013.
 
 
b)
a decrease in administrative expenses from $125,027 in the three months ended January 31, 2012 to $67,006 in the three months ended January 31, 2013, primarily as a result of an decrease in direct costs charged to the Company by AXIS which decreased from $119,212 to $60,237.
 
 
c)
a decrease in stock based compensation from $281,205 in the three months ended January 31, 2012 to $76,154 in the three months ended January 31, 2013.  In December 2010 and May 2011, the Company issued options over shares of Common Stock to employees under the 2010 Equity Incentive Plan. The decrease is due to options being fully vested in prior periods.
 
 
d)
a decrease in exploration expenditure expense from $578,356 for the three months ended January 31, 2012 to $321,581 for the three months ended January 31, 2013. The decrease is primarily due to reduced exploration activities for the quarter ending 31 January 2013 in comparison to prior period; $165,000 of option fees being expensed as a result of the LIMO Deed were incurred for the quarter ending 31 January 2012, whereas no such costs are applicable for the current quarter; and $24,591 of contractor/consultant costs charged for the quarter ending 31 January 2012 but no such costs incurred for the current quarter. The exploration costs include salaries for both our staff and contract field staff, accommodations, Laos office costs, field work expenditure and reviewing data on exploration targets in Laos. In relation to our Century Thrust Joint Venture, field work commenced in November 2012 including drilling, assaying, camp costs and contractors.
 
As a result of the foregoing, the loss from operations decreased from $1,002,198 for the three months ended January 31, 2012 to $474,767 for the three months ended January 31, 2013.
 
The Company recorded a foreign currency exchange loss of $54,901 for the three months ended January 31, 2013 compared to a foreign currency exchange gain of $14,248 for the three months ended January 31, 2012, primarily due to revaluation of the advance from affiliate which is denominated in Australian dollars.
 
The net loss was $529,668 for the three months ended January 31, 2013 compared to a net loss of $987,949 for the three months ended January 31, 2012.
 
Liquidity and Capital Resources
 
For the three months ended January 31, 2013, net cash used in operating activities was $408,717 consisting primarily of the net loss from operations of $529,668, which was offset by a non-cash cost charge relating to employee options issued for stock based compensation of $76,154. Net cash used in investing activities was $nil; and net cash provided by financing activities was $398,829 being advances from affiliates.
 
As of January 31, 2013 the Company has short term obligations of $152,950 comprising accounts payable and accruals.
 
The Company has $8,238 in cash at January 31, 2013.
 
The Company may fund up to $6.5 million in exploration expenditure, of which $3.47 million has already been funded, in order to acquire a 51% beneficial interest in the Century Thrust Joint Venture (“Joint Venture”).
 
 
 
13
 
 
As of December 31, 2011, the Company had completed its initial drilling program on the Century Thrust Joint Venture tenements and is currently compiling assay results. Depending upon available capital resources, the Company may conduct additional exploration drilling programs during 2013 on the Joint Venture.
 
The Company’s ability to continue operations through 2013, including the ability to purchase any interest in the Joint Venture, is dependent upon future funding from affiliated entities, capital raisings, or its ability to commence revenue producing operations and positive cash flows, of which there can be no assurance.
 
The Company continues to search for additional sources of capital, as and when needed; however, there can be no assurance funding will be successfully obtained. Even if it is obtained, there is no assurance that it will not be secured on terms that are highly dilutive to existing shareholders.
 
Information Concerning Forward Looking Statements
 
This report and other reports, as well as other written and oral statements made or released by us, may contain forward looking statements. Forward looking statements are statements that describe, or that are based on, our current expectations, estimates, projections and beliefs. Forward looking statements are based on assumptions made by us, and on information currently available to us. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but such statements do not predict or assure any future occurrence and may turn out to be wrong. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe," "anticipate," "intend," "expect," "estimate," "project", "predict", "hope", "should", "may", and "will", other words and expressions that have similar meanings, and variations of such words and expressions, among others, usually are intended to help identify forward-looking statements.
 
Forward-looking statements are subject to both known and unknown risks and uncertainties and can be affected by inaccurate assumptions we might make.  Risks, uncertainties and inaccurate assumptions could cause actual results to differ materially from historical results or those currently anticipated.  Consequently, no forward-looking statement can be guaranteed.  The potential risks and uncertainties that could affect forward looking statements include, but are not limited to:
 
●
The risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2012,
 
●
The risks and hazards inherent in the mineral exploration business (including environmental hazards, industrial accidents, weather or geologically related conditions),
 
●
The uncertainties inherent in our exploratory activities, including risks relating to permitting and regulatory delays,
 
●
The political, governmental and regulatory risks affecting mineral exploration activities in foreign countries,
 
●
The effects of environmental and other governmental regulations, and
 
●
Uncertainty as to whether financing will be available to enable further exploration and development.
 
●
Movements in foreign exchange rates,
 
●
Performance of information systems,
 
●
Ability of the Company to hire, train and retain qualified employees,
 
●
Our ability to enter into key exploration agreements and the performance of contract counterparties.
 
In addition, other risks, uncertainties, assumptions, and factors that could affect the Company's results and prospects are described in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2012, including under the heading “Risk Factors” and elsewhere herein and therein and may further be described in the Company's prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by the Company.
 
 
14
 
 
We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this document.  The information contained in this report is current only as of its date, and we assume no obligation to update any forward-looking statements.
 
 
At January 31, 2013, the Company had no outstanding loan facilities.
 
The Company reports in US$ and holds cash in Australian dollars. At January 31, 2013, this amounted to A$5,613 A change in the exchange rate between the A$ and the US$ will have an effect on the amounts reported in the Company’s financial statements, and create a foreign exchange gain or loss. A movement of 1% in the A$ versus the US$ exchange rate will have a US$58 effect on the balance sheet and income statement.
 
 
 
a)
Disclosure Controls and Procedures
 
Our principal executive officer and our principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended) as of the end of the period covered by this report. Based on that evaluation, such principal executive officer and principal financial officer concluded that, the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report at the reasonable level of assurance.
 
 
b)
Change in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting during the first quarter of fiscal 2013 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
 
 
c)
Other
 
We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and our principal executive officer and principal financial officer have concluded, as of January 31, 2013, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.
 
 
 
15
 
 
 
 
Not Applicable
 
 
Not Applicable for smaller reporting company.
 
 
Not Applicable
 
 
Not Applicable
 
 
Not Applicable
 
 
Not Applicable
 
Item 6.
 
 
(a)
 
Exhibit No.
Description
         
     
31.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick
     
31.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Simon Joseph Lee
     
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick
     
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Simon Joseph Lee
     
101
The following materials from the Aurum, Inc. Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 formatted in Extensible Business Reporting Language (XBRL):  (i) the Statements of Operations, (ii) the Balance Sheets, (iii) the Statements of Cash Flows, (iv) Statement of Stockholders’ (Deficit) and (v) related notes.
         
       
#101.INS XBRL Instance Document.
         
       
#101.SCH XBRL Taxonomy Extension Schema Document.
         
       
#101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
         
       
#101.LAB XBRL Taxonomy Extension Label Linkbase Document.
         
       
#101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
         
       
#101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
       
_________________
       
# Filed herewith.  In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.
 
 
 
16
 
 
(FORM 10-Q)
 
 
Pursuant to the requirements 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.
 
 
Aurum, Inc.
   
   
   
   
   
 
By: /s/ Joseph Gutnick          
 
Joseph Gutnick
 
Chairman of the Board, President and Chief Executive Officer
 
(Principal Executive Officer)
   
   
   
   
   
 
By: /s/ Craig Michael             
 
Craig Michael
 
Director
   
   
   
   
   
 
By: /s/ Simon Lee                  
 
Simon Lee
 
Chief Financial Officer
 
(Principal Financial Officer)
   

Dated March 15, 2013

 
 
17
 
 
 
 
Exhibit No.
 
Description
       
 
31.1
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick
 
31.2
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Simon Joseph Lee
 
32.1
 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick
 
32.2
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Simon Joseph Lee

 
 
18
Aurum Megametals (PK) (USOTC:AURM)
Graphique Historique de l'Action
De Déc 2024 à Jan 2025 Plus de graphiques de la Bourse Aurum Megametals (PK)
Aurum Megametals (PK) (USOTC:AURM)
Graphique Historique de l'Action
De Jan 2024 à Jan 2025 Plus de graphiques de la Bourse Aurum Megametals (PK)