SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended November 30, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 333-153441
BLUE GEM ENTERPRISE
(Exact name of small business issuer as specified in its charter)
Nevada 1000 20-8043372
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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245 King George Road
Suite # 105 Brantford, ON, Canada,
N3R 7N7
(Address of principal executive offices)
Telephone: (519) 488-4724
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [X] No [ ]
The number of shares of Common Stock, $0.001 par value, of the registrant
outstanding at January 13, 2009 was 6,520,000.
TABLE OF CONTENTS
Page
----
PART I.
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis or Plan of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risks 9
Item 4. Controls and Procedures 9
PART II.
Item 1. Legal Proceedings 10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matter to Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits 10
SIGNATURES 11
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2
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended Section 21E of the
Securities Exchanged Act of 193, as amended, which are intended to be covered by
the safe harbors created thereby. The statements contained in this report on
Form 10-Q that are not purely historical are forward-looking statements within
the meaning of applicable securities laws. Forward-looking statements include
statements regarding our "expectations," "anticipation," "intentions,"
"beliefs," or "strategies" regarding the future. Forward looking statements also
include statements regarding fluctuations in the price of gold or certain other
commodities, (such as silver, copper, diesel fuel, and electricity); changes in
national and local government legislation, taxation, controls, regulations and
political or economic changes in the United States or other countries in which
we may carry on business in the future; business opportunities that may be
presented to or pursued by us; our ability to integrate acquisitions
successfully; operating or technical difficulties in connection with exploration
or mining activities; the speculative nature of gold exploration, including
risks of diminishing quantities or grades of reserves; and contests over our
title to properties. All forward-looking statements included in this report are
based on information available to us as of the filing date of this report, and
we assume no obligation to update any such forward-looking statements. Our
actual results could differ materially from the forward-looking statements.
3
PART I.
ITEM 1. FINANCIAL STATEMENTS
BLUE GEM ENTERPRISE
(An Exploration Stage Company)
BALANCE SHEETS
November 30, May 31,
2008 2008
- $ - - $ -
-------- --------
(unaudited)
ASSETS
Current
Cash 13,314 38,240
-------- --------
Total current assets 13,314 38,240
-------- --------
Total assets 13,314 38,240
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Total liabilities -- --
-------- --------
STOCKHOLDERS' EQUITY
Common stock
Authorized:
75,000,000 common shares with a par value of $0.001
Issued and outstanding:
6,520,000 common shares at November 30, 2008 and May 31, 2008
respectively 6,520 6,520
Additional paid in capital 53,480 50,480
Deficit accumulated during the exploration stage (46,686) (18,760)
-------- --------
Total stockholders' equity 13,314 38,240
-------- --------
Total liabilities and stockholders' equity 13,314 38,240
======== ========
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See accompanying note to the financial statements
4
BLUE GEM ENTERPRISE
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Period from
Three months Three months Six months Six months November 28, 2006
ended ended ended ended (Inception) to
November 30, November 30, November 30, November 30, November 30,
2008 2007 2008 2007 2008
- $ - - $ - - $ - - $ - - $ -
---------- ---------- ---------- ---------- ----------
Mineral property 620 -- 620 -- 10,620
Office and general 22,119 1,500 27,347 3,000 36,367
---------- ---------- ---------- ---------- ----------
Total operating expenses (22,739) (1,500) (27,967) (3,000) (46,987)
---------- ---------- ---------- ---------- ----------
Interest income 15 7 41 10 301
---------- ---------- ---------- ---------- ----------
Net loss (22,724) (1,493) (27,926) (2,990) (46,686)
========== ========== ========== ========== ==========
Basic and diluted loss per share (0.00) (0.00) (0.00) (0.00)
---------- ---------- ---------- ----------
Weighted average number of
shares outstanding 6,520,000 5,648,571 6,520,000 5,073,880
========== ========== ========== ==========
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See accompanying note to the financial statements
5
BLUE GEM ENTERPRISE
(A Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Period from
Six months Six months November 28, 2006
ended ended (Inception) to
November 30, November 30, November 30,
2008 2007 2008
- $ - - $ - - $ -
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (27,926) (2,990) (46,686)
Non cash items:
Write off of mineral property cost -- -- 10,000
Donated services 3,000 3,000 12,000
-------- -------- --------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES (24,926) 10 (24,686)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Mineral property acquisition costs -- -- (10,000)
-------- -------- --------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES -- -- (10,000)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from sale of common stock -- 13,000 48,000
-------- -------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES -- 13,000 48,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (24,926) 13,010 13,314
Cash, beginning of period 38,240 5,098 --
-------- -------- --------
Cash, end of period 13,314 18,108 13,314
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid -- -- --
======== ======== ========
Taxes paid -- -- --
======== ======== ========
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See accompanying note to the financial statements
6
BLUE GEM ENTERPRISE
(A Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2008
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Blue Gem Enterprise
("Blue Gem or the "Company") have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Form S-1 filed with the SEC. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for our
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements that would substantially
duplicate the disclosure contained in the audited financial statements for
fiscal 2008, as reported in the Form S-1, have been omitted.
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company anticipates future losses in the development of its business raising
substantial doubt about the Company's ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company
generating profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. Management intends to finance operating
costs over the next twelve months with existing cash on hand, loans from
directors and/or issuance of common shares.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion provides information that we believe is relevant to an
assessment and understanding of the results of operations and financial
condition of our company. It should be read in conjunction with the Financial
Statements and accompanying Notes.
PLAN OF OPERATION
Our plan of operation for the following twelve months is to complete the first
and second of the three phases of the exploration program on our claim. In
addition to the $16,000 we anticipate spending for the first two phases of the
exploration program as outlined below, we anticipate spending an additional
$25,000 on general and administration expenses and complying with reporting
obligations. Total expenditures over the next 12 months are therefore expected
to be approximately $41,000. If we experience a shortage of funds prior to
funding we may utilize funds from our directors. However they have no formal
commitment, arrangement or legal obligation to advance or loan funds to the
company.
Phase 1 Data Evaluation: Magnetometer data for the claim area should be
researched for anomalies potentially caused by mineralization. Priority areas
for prospecting will be any such anomalies.
Phase 2 Geochemical sampling: All priority areas found will be prospected in
detail and systematic soil sampling will be taken. Trenching may be employed to
gather soil samples. Samples need to be analyzed at a specialized laboratory.
Positive results will be the outline of mineralized bodies, through indicator
element signatures.
Phase 3 Drilling: Positive areas will need to be drill tested. The amount of
drilling will depend on the success of phase 1 and 2.
BUDGET
- $ -
------
Phase 1 6,000
Phase 2 10,000
Phase 3 70,000
------
Total 86,000
======
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We plan to commence Phase 1 of the exploration program on the claim in the fall
of 2008. We expect this phase to take 8 days to complete and an additional one
to two months for the geologist to prepare his report.
The above program costs are management's estimates based upon the
recommendations of the professional geologist's report and the actual project
costs may exceed our estimates. To date, we have not commenced exploration.
Following Phase 1 of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with Phase 2 of our
exploration program. Subject to the results of Phase 1, we anticipate commencing
with Phase 2 and 3 in fall 2008 or spring 2009. We will require additional
funding to proceed with Phase 3 work on the claim; we have no current plans on
how to raise the additional funding. We cannot provide any assurance that we
will be able to raise sufficient funds to proceed with any work after the second
phase of the exploration program.
8
RESULTS OF OPERATIONS
THREE-MONTH PERIOD ENDED NOVEMBER 30, 2008 AND 2007
We did not earn any revenues during the three-month period ended November 30,
2008 (three-month period ended November 30, 2007: $Nil).
We incurred operating expenses in the amount of $22,739 for the three-month
period ended November 30, 2008 (three-month period ended November 30, 2007:
$1,500).
SIX-MONTH PERIOD ENDED NOVEMBER 30, 2008 AND 2007
We did not earn any revenues during the six-month period ended November 30, 2008
(six-month period ended November 30, 2007: $Nil).
We incurred operating expenses in the amount of $27,967 for the six-month period
ended November 30, 2008 (six-month period ended November 30, 2007: $3,000).
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 2008, we had a cash balance of $13,314. We believe that we have
enough cash on hand to complete Phase 1 of our exploration program. If the
results of the Phase 1 are particularly encouraging, we will need to raise
additional funds for Phases 2 and 3. Additional funds will need to be raised to
support work that may be undertaken subsequent to Phases 2 and 3.
If additional funds are required, the additional funding will likely come from
equity financing from the sale of our common stock or sale of part of our
interest in our mineral claims. If we are successful in completing an equity
financing, existing shareholders will experience dilution of their interest in
our Company. We do not have any financing arranged and we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock to fund our exploration activities. In the
absence of such financing, our business will likely fail.
There are no assurances that we will be able to achieve further sales of our
common stock or any other form of additional financing. If we are unable to
achieve the financing necessary to continue our plan of operations, then we will
not be able to continue our exploration of the Claims and our business will
fail.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act),
we are not required to provide the information called for by this Item 3.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this
Quarterly Report on Form 10-Q. Based on the evaluation and the identification of
the material weaknesses in our internal control over financial reporting our
Chief Executive Officer and our Chief Accounting Officer concluded that, as of
November 30, 2008, our disclosure controls and procedures were effective.
9
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes during the period covered by this Quarterly Report on
Form 10-Q in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our controls and procedures will prevent all
potential error and fraud. 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) The following documents are filed as part of this Report:
(1) Financial statements filed as part of this Report:
Balance Sheets as of November 30, 2008 (Unaudited) and May 31, 2008
Statements of Operations for the three-month periods ended November 30, 2008 and
2007, the six-month periods ended November 30, 2008 and 2007 and the period from
November 28, 2006 (inception) to November 30, 2008 (Unaudited).
Statements of Cash Flows for the six-month periods ended November 30, 2008 and
2007, and the period from November 28, 2006 (inception) to November 30, 2008
(Unaudited)
Notes to Financial Statements
10
(2) Exhibits filed as part of this Report:
Exhibit
Number Description
------ -----------
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31.1 Certification of Chief Executive Officer pursuant to Rule 13a-15e or
15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-15e or
15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports filed on Form 8-K during the quarter ended November 30, 2008:
None.
SIGNATURES
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.
Blue Gem Enterprise
Date: January 13, 2009 (Registrant)
/s/ Dave Beatty
--------------------------------------
By: Dave Beatty
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Title: President and Chief Executive Officer
/s/ Susan Loyd
--------------------------------------
By: Susan Loyd
Title: Chief Financial Officer & Principal
Accounting Officer
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11
Blue Gem Enterprise (CE) (USOTC:BGEM)
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