NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
Organization
The
Company was incorporated in the State of Nevada, U.S.A. on April 21, 2006.
Exploration
Stage Activities
The
Company has been in the exploration stage since its formation and is primarily engaged in the acquisition and exploration of mining
claims. Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and
enter a development stage. During the fiscal year 2012, the Company entered into an agreement with Mayan Mineral Ltd. to acquire
a resource property in Nevada (Note 4). Currently, the Company is actively looking for other mineral properties for its planned
business operation.
Going
Concern
These
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
(“US GAAP”) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business.
The
general business strategy of the Company is to acquire and explore mineral properties. The continued operations of the Company
and the recoverability of mineral property costs is dependent upon the existence of economically recoverable mineral reserves,
the ability of the Company to obtain necessary financing to complete the development of its properties, and upon future profitable
production. The Company has not generated any revenues or completed development of any properties to date. Further, the Company
has a working capital deficit of $545,853 (June 30, 2017 - $524,118), has incurred losses of $652,913 since inception, and further
significant losses are expected to be incurred in the exploration and development of its mineral properties. The Company will
require additional funds to meet its obligations and maintain its operations. There can be no guarantee that the Company will
be successful in raising the necessary financing. Management’s plans in this regard are to raise equity financing as required.
These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments that might result from this uncertainty.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
The
financial statements of the Company have been prepared in accordance with US GAAP. Because a precise determination of many assets
and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgment. Actual results may vary from these estimates. The financial statements
have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of
the significant accounting policies summarized below.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
Cash
consist of cash on hand and deposits in banks.
|
|
b)
|
Mineral
Property Acquisition Payments
|
The
Company expenses all costs incurred on mineral properties to which it has secured exploration rights prior to the establishment
of proven and probable reserves. If and when proven and probable reserves are determined for a property and a feasibility study
prepared with respect to the property, then subsequent exploration and development costs of the property will be capitalized.
The
Company regularly performs evaluations of any investment in mineral properties to assess the recoverability and/or the residual
value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change
which indicate the carrying amount of an asset may not be recoverable.
|
|
c)
|
Exploration
Expenditures
|
The
Company follows a policy of expensing exploration expenditures until a production decision in respect of the project and the Company
is reasonably assured that it will receive regulatory approval to permit mining operations, which may include the receipt of a
legally binding project approval certificate.
|
|
d)
|
Asset
Retirement Obligations
|
The
Company has adopted ASC 410, “Accounting for Asset Retirement Obligations”, which requires that an asset retirement
obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the
period which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset.
The
cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over
the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted
liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow,
discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation
exists due to the early stage of exploration. Accordingly, no liability has been recorded.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
|
e)
|
Use
of Estimates and Assumptions
|
The
preparation of financial statements in conformity with United States generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the Date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
ASC
820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent,
objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the
fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes
the inputs into three levels that may be used to measure fair value:
Level
1 - Quoted prices in active markets for identical assets or liabilities;
Level
2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level
3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions
about the assumptions that market participants would use in pricing.
The
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loan payable and
due to a related party. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which
consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other
financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The
Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The
financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree
of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency
risk.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
The
Company accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” and ASC 740 —Accounting
for Uncertainty in Income Taxes, which require the liability method of accounting for income taxes. The liability method requires
the recognition of deferred tax assets and liabilities for future tax consequences of temporary differences between the financial
statement basis and the tax basis of assets and liabilities.
|
|
h)
|
Basic
and Diluted Net Loss per Share
|
The
Company reports basic loss per share in accordance with ASC 260 – “Earnings per Share”. Basic loss per share
is computed using the weighted average number of common stock outstanding during the period. Diluted loss per share is computed
using the weighted average number of common and potentially dilutive common stock outstanding during the period. Diluted loss
per share is equal to basic loss per share because there are no potential dilutive securities.
|
|
i)
|
Foreign
Currency Translation
|
The
Company’s functional currency is the U.S. dollar. Transactions in foreign currencies are translated into U.S. dollars at
the rate of exchange prevailing at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated
into U.S. dollars at the rate prevailing at the balance sheet date. Non-monetary items are translated at the historical rate unless
such items are carried at market value, in which case they are translated using exchange rates that existed when the value were
determined. Any resulting exchange rate differences are recorded in the statement of operations.
|
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement
of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after 15 December 2017, and interim
periods within those years. For all other entities, it is effective for fiscal years beginning after 15 December 2018, and interim
periods within fiscal years beginning after 15 December 2019. Early adoption is permitted. Entities will have to apply the guidance
retrospectively, but if it is impracticable to do so for an issue, the amendments related to that issue would be applied prospectively.
The Company is currently evaluating the impact of the adoption of this guidance on its financial statements, if any.
On
November 17, 2016, the FASB issued ASU 2016-18, Restricted Cash. Entities will be required to show the changes in the total of
cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities
will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the
statement of cash flows. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements,
if any.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
|
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS (Continued)
|
In
March 2016, the FASB issued ASU 2016-02, Leases, which supersedes ASC Topic 840, Leases, and sets forth the principles for the
recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to
classify leases as either finance or operating leases and to record on the balance sheet a right-of-use asset and a lease liability,
equal to the present value of the remaining lease payments, for all leases with a term greater than 12 months regardless of the
lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest
rate method or a straight-line basis over the term of the lease. ASU 2016-02 will be effective beginning January 1, 2019, with
early adoption permitted. Entities are required to use a modified retrospective transition method for existing leases. The Company
currently evaluating the potential impact this guidance will have on its financial statements, if any.
In
January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities. The amendments to the guidance enhance the reporting model for financial instruments, which
includes amendments to address aspects of recognition, measurement, presentation, and disclosure. The updated guidance is effective
beginning January 1, 2018. The Company does not expect this guidance to have a material impact on its financial statements.
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as a new Topic, ASC 606. The new revenue recognition
standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is
that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. Companies may apply the
new guidance using either the full retrospective transition method, which requires restating each prior period presented, or the
modified retrospective transition method, under which the new guidance is applied to the current period presented in the financial
statements and a cumulative-effect adjustment is recorded as of the date of adoption. The Company is currently evaluating the
potential impact this guidance will have on its financial statements.
|
4.
|
MINERAL
CLAIM INTEREST
|
On
August 15, 2013, the Company entered into a Quitclaim Deed (the “Deed”) with Kee Nez Resources, LLC (“Grantor”),
a Utah limited liability company. Pursuant to the Deed, the Grantor, in consideration of $10 and other valuable consideration,
remise, release, and forever quitclaim unto the Company all of Grantor’s right, title, and interest in and to the GSR group
of unpatented lode mining claims situated in Churchill Country, Nevada. As a result, the Company has obtained title to the GSR
claims in August 2013.
The
Company did not incur further expenditures on the property during the period ending December 31, 2017 (June 30, 2017: $nil) due
to lack of cash.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2017
(Stated
in U.S. Dollars)
|
|
a)
|
On
April 24, 2006, the Company issued 6,000,000 common shares at $0.00001 per share to two founding shareholders.
|
|
|
|
|
|
|
b)
|
On
March 28, 2007, the Company closed its public offering and issued additional 1,070,000 common shares at $0.10.
|
|
|
|
|
|
|
c)
|
The
Company has not issued any shares during the period ended December 31, 2017 and it has no stock option plan, warrants or other
dilutive securities.
|
|
6.
|
DUE
TO RELATED PARTIES
|
As
of December 31, 2017 due to related parties balance of $172,576 (June 30, 2017: $152,626) represents the combination of the following:
|
|
a)
|
$54,959
(June 30, 2017: $54,959) owed to a company controlled by a former director and principal shareholder of the Company, for the
amount of office, transfer agent and travel expenses paid by the related party on behalf of the Company. The amount is unsecured,
non-interest bearing and due on demand;
|
|
|
|
|
|
|
b)
|
$28,000
(June 30, 2017: $28,000) owed to a director of the Company, for the amount of office, travel and telephone expenses paid by
the related party on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.
|
|
|
|
|
|
|
c)
|
$89,617
(June 30, 2017: $69,667) was payable to a principal shareholder’s company, for the operating expenses paid by the related
party on behalf of the Company. The loan amount is unsecured, non-interest bearing and due on demand.
|
Loan
payable consists of the following:
$143,700
(June 30, 2017: $143,700) was payable to 0787129 B.C. Ltd. (a non-related party) of which $51,272 and $34,827 were the result
of the assignment and transfer from loan payable to ATP Corporate Services Corp. (a non-related party) and Bobcat Development,
respectively. The loan amount is unsecured, non-interest bearing and due on demand.
$57,858
(June 30, 2017: $57,858) was payable to Bobcat Development (a non-related party). The loan amount is unsecured, non-interest bearing
and due on demand.
GOLDEN
STAR RESOURCE CORPORATION
