Attached files
file | filename |
---|---|
EX-32.2 - CONNEXUS CORP | exhibit322.htm |
EX-31.1 - CONNEXUS CORP | exhibit311.htm |
EX-32.1 - CONNEXUS CORP | exhibit321.htm |
EX-31.2 - CONNEXUS CORP | exhibit3112.htm |
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 March 31, 2010
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 Number 333-119566
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(Exact
name of registrant as specified in its charter)
Nevada
|
98-0430746
|
|
State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization
|
Identification
No.)
|
800
Bellevue Way, Suite 400, Bellevue, WA, USA 98004
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (425)
637-3080
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
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 definition of "large accelerated filer", "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Larger
accelerated
filer Accelerated
filer
Non-accelerated
filer Smaller
reporting company X
Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes No X
Number of
shares outstanding of the registrant’s class of common stock as of May 13, 2010:
80,000,000
PART
I – FINANCIAL INFORMATION
Item
1. Consolidated Financial
Statements (Unaudited)
|
Page
|
Balance
Sheets
|
F-2
|
Interim
Statements of Operations
|
F-3
to F-4
|
Interim
Statements of Cash Flows
|
F-5
|
Interim
Statement of Stockholders’ (Deficit)
|
F-6
|
Notes
to Interim Financial Statements
|
F-7
to F-11
|
Item
2. Management’s Discussion and Analysis
|
13
|
Item
3. Quantitative and Qualitative Disclosure about Market
Risk
|
15
|
Item
4. Controls and Procedures
|
15
|
Item
4(A) T. Controls and Procedures
|
15
|
PART
II – OTHER INFORMATION
|
|
Item
1. Legal Proceedings - Not
Applicable
|
16
|
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
- Not
Applicable
|
16
|
Item
3. Defaults upon Senior Securities – Not
Applicable
|
16
|
Item
4. Removed and Reserved
|
16
|
Item
5. Other Information
|
16
|
Item
6. Exhibits
|
16
|
SIGNATURES
|
17
|
PART
I - FINANCIAL INFORMATION
ITEM
1. FINANCIAL
STATEMENTS
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
INTERIM
FINANCIAL STATEMENTS
March 31,
2010
(Unaudited)
Page
|
|
Financial
Statements:
|
|
Balance
Sheets
|
F-2
|
Interim
Statements of Operations
|
F-3
to F-4
|
Interim
Statements of Cash Flows
|
F-5
|
Interim
Statement of Stockholders’ (Deficit)
|
F-6
|
Notes
to Interim Financial Statements
|
F-7
to F11
|
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
BALANCE
SHEETS
March
31,
2010
(Unaudited)
|
June
30,
2009
(See
Note 1)
|
|||
ASSETS
|
||||
Current
|
||||
Cash
|
$
|
-
|
$
|
170
|
Prepaid
expenses
|
125
|
679
|
||
Advances
receivable (Note 4)
|
14,357
|
-
|
||
Total
Current Assets
|
14,482
|
849
|
||
Computer
Equipment
|
-
|
823
|
||
Website
Developments costs
|
1,000
|
-
|
||
Note
Receivable – (Note 5)
|
841,150
|
-
|
||
TOTAL
ASSETS
|
$
|
856,632
|
$
|
1,672
|
LIABILITIES
AND STOCKHOLDERS’ (DEFICIT)
|
||||
LIABILITIES
|
||||
Current
|
||||
Accounts
payable
|
$
|
57,923
|
$
|
5,803
|
Accrued
liabilities
|
23,700
|
9,000
|
||
Advances
payable (Note 6)
|
66,461
|
-
|
||
Accounts
payable, related parties (Note 7)
|
60,000
|
-
|
||
Convertible
debenture – net of discount (Note 8)
|
830,237
|
|||
Total
Current Liabilities
|
1,038,321
|
14,803
|
||
TOTAL
LIABILITIES
|
1,038,321
|
14,803
|
||
STOCKHOLDERS’
(DEFICIT)
|
||||
Capital
Stock
|
||||
Authorized:
|
||||
250,000,000
common shares, par value $0.001 per share
10,000,000
preferred shares, par value $0.001 per share
|
||||
Issued
and outstanding:
|
||||
80,000,000
common shares
|
80,000
|
80,000
|
||
Additional
paid-in capital
|
464,892
|
45,585
|
||
Accumulated
comprehensive income
|
6,153
|
6,153
|
||
Accumulated
(Deficit)
|
(215,710)
|
(144,869)
|
||
Accumulated
(Deficit) during Development Stage
|
(517,024)
|
-
|
||
Total
Stockholders’ (Deficit)
|
(181,689)
|
(13,131)
|
||
TOTAL
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
|
$
|
856,632
|
$
|
1,672
|
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
INTERIM STATEMENTS OF
OPERATIONS
(Unaudited)
Three-month
Period
ending
March
31, 2010
|
Three-month
Period
ending
March
31, 2009
|
|||
Revenue
|
$
|
-
|
$
|
-
|
-
|
-
|
|||
Expenses
|
||||
Marketing
and travel
|
3,951
|
-
|
||
Office
and administration
|
10,185
|
312
|
||
Professional
Fees
|
19,121
|
3,475
|
||
Consulting
|
96,223
|
-
|
||
Stock
based compensation
|
385,362
|
-
|
||
Beneficial
conversion feature
|
2,182
|
-
|
||
517,024
|
3,787
|
|||
Net
Operating Loss
|
(517,024)
|
(3,787)
|
||
Other
Income and (Expenses)
|
||||
Interest
Income
|
19,150
|
-
|
||
Interest
Expense
|
(19,150)
|
-
|
||
Gain
on sale of assets
|
-
|
-
|
||
-
|
-
|
|||
Net
(Loss) from Continuing Operations
|
(517,024)
|
$
|
(3,787)
|
|
Discontinued
Operations (Note 10)
|
||||
Net
profit (loss) from discontinued operations
|
-
|
2,658
|
||
Net
(Loss) for the Period
|
$
|
(517,024)
|
$
|
(1,129)
|
Basic
And Diluted Loss Per Share
|
$
|
(0.01)
|
$
|
Nil
|
Weighted
Average Number of Shares Outstanding
|
80,000,000
|
80,000,000
|
||
BRAZIL
GOLD CORP
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
INTERIM STATEMENTS OF
OPERATIONS
(Unaudited)
Nine-month
Period
ending
March
31, 2010
|
Nine-month
Period
ending
March
31, 2009
|
Cumulative
Amounts from January 1, 2010
(Date
of New
Development
Stage)
to
March 31, 2010
|
||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
-
|
-
|
||||
Expenses
|
||||||
Marketing
and travel
|
5,726
|
-
|
3,951
|
|||
Office
and administration
|
15,357
|
4,554
|
10,185
|
|||
Professional
Fees
|
64,725
|
15,857
|
19,121
|
|||
Consulting
|
118,723
|
-
|
96,223
|
|||
Stock
based compensation
|
385,362
|
-
|
385,362
|
|||
Beneficial
conversion feature
|
2,182
|
-
|
2,182
|
|||
592,075
|
20,411
|
517,024
|
||||
Net
Operating (Loss)
|
(592,075)
|
(20,411)
|
(517,024)
|
|||
Other
Income and (Expenses)
|
||||||
Interest
Income
|
19,150
|
-
|
19,150
|
|||
Interest
Expense
|
(19,150)
|
-
|
(19,150)
|
|||
Gain
on sale of assets
|
377
|
-
|
-
|
|||
377
|
-
|
-
|
||||
Net
(Loss) from Continuing Operations
|
(591,698)
|
(20,411)
|
(517,024)
|
|||
Discontinued
Operations (Note 10)
|
||||||
Net
Profit (Loss) from discontinued operations
|
3,833
|
(1,353)
|
-
|
|||
Net
(Loss) For The Period
|
$
|
(587,865)
|
$
|
(21,764)
|
$
|
(517,024)
|
Basic
And Diluted Loss Per Share
|
$
|
(0.01)
|
$
|
Nil
|
$
|
(0.01)
|
Weighted
Average Number of Shares Outstanding
|
80,000,000
|
80,000,000
|
80,000,000
|
|||
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
INTERIM STATEMENTS OF CASH
FLOWS
(Unaudited)
Nine-month
period ending
March
31, 2010
|
Nine-month
period ending
March
31, 2009
|
Cumulative
Amounts from January 1, 2010 (Date of New
Development
Stage)
to
March 31, 2010
|
||||
Cash
Flows from Operating Activities
|
||||||
Net
(loss) for the period
|
$
|
(587,865)
|
$
|
(21,764)
|
$
|
(517,024)
|
Adjustments
to Reconcile Net Profit (Loss) to Net Cash Provided by (Used in) Operating
Activities
|
||||||
Gain
on sale of assets
|
(377)
|
-
|
-
|
|||
Prepaid
expenses
|
554
|
(126)
|
108
|
|||
Stock
based compensation
|
385,362
|
-
|
385,362
|
|||
Depreciation
and amortization
|
-
|
1,162
|
-
|
|||
Beneficial
conversion feature
|
2,182
|
-
|
2,182
|
|||
Accounts
payable and accrued liabilities
|
126,820
|
(5,036)
|
91,695
|
|||
Net
Cash (Used in) Operating Activities
|
(73,324)
|
(25,764)
|
(37,677)
|
|||
Cash
Flows from Investing Activities
|
||||||
Note
receivables
|
(822,000)
|
-
|
(340,242)
|
|||
Advances
receivable
|
(14,357)
|
-
|
(14,357)
|
|||
Additions
to capital assets
|
(1,000)
|
-
|
(1,000)
|
|||
Disposal
of capital assets
|
1,200
|
-
|
-
|
|||
Net
Cash Provided by Investing Activities
|
(836,157)
|
-
|
(355,599)
|
|||
Cash
Flows From Financing Activities
|
||||||
Increase
in additional paid-in capital
|
20,850
|
-
|
-
|
|||
Increase
in advances payable
|
66,461
|
-
|
48,276
|
|||
Increase
in convertible debenture
|
822,000
|
345,000
|
||||
Foreign
currency translation adjustment
|
-
|
(86)
|
-
|
|||
Net
Cash Provided by (Used in) Financing Activities
|
909,311
|
(86)
|
393,276
|
|||
(Decrease)
in Cash during the Period
|
(170)
|
(25,850)
|
-
|
|||
Cash,
Beginning Of Period
|
170
|
26,903
|
-
|
|||
Cash,
End Of Period
|
$
|
-
|
$
|
1,053
|
$
|
-
|
Non-cash
Transactions
|
||||||
Beneficial
conversion feature
|
$
|
13,095
|
$
|
-
|
$
|
13,095
|
Supplemental
Disclosure Of Cash Flow Information
|
||||||
Cash
paid for:
|
||||||
Interest
|
$
|
-
|
$
|
-
|
-
|
|
Income
taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
BRAZIL
GOLD CORP.
(Formerly
Dynamic Alert Limited)
(A
Development Stage Company)
STATEMENT OF STOCKHOLDERS’
(DEFICIT)
For
the Period from July 1, 2008 to March 31, 2010
CAPITAL
STOCK
|
ACCUMULATED
|
ACCUMULATED
|
||||||||||||||||
ADDITIONAL
|
DEFICIT
DURING
|
COMPRE-
|
||||||||||||||||
PREFERRED
|
COMMON
|
PAID-IN
|
ACCUMULATED
|
DEVELOPMENT
|
HENSIVE
|
|||||||||||||
SHARES
|
AMOUNT
|
SHARES
|
AMOUNT
|
CAPITAL
|
(DEFICIT)
|
STAGE
|
INCOME
(LOSS)
|
TOTAL
|
||||||||||
Balance,
July
1, 2008
|
-
|
$
|
-
|
80,000,000
|
$
|
80,000
|
$
|
45,000
|
$
|
(109,181)
|
$
|
-
|
$
|
6,235
|
$
|
22,054
|
||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(82)
|
|
(82)
|
||||||||
Increase
in additional paid-in capital
|
-
|
-
|
-
|
-
|
585
|
-
|
-
|
-
|
|
585
|
||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
-
|
(35,688)
|
-
|
-
|
|
(35,688)
|
||||||||
Balance
June
30, 2009
|
-
|
-
|
80,000,000
|
80,000
|
45,585
|
(144,869)
|
-
|
6,153
|
|
(13,131)
|
||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
||||||||
Capital
contributions
|
-
|
-
|
-
|
-
|
20,850
|
-
|
-
|
-
|
20,850
|
|||||||||
Stock
based compensation
|
-
|
-
|
-
|
-
|
385,362
|
-
|
-
|
-
|
|
385,362
|
||||||||
Beneficial
conversion feature
|
-
|
-
|
-
|
-
|
13,095
|
-
|
-
|
-
|
13,095
|
|||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
-
|
(70,841)
|
(517,024)
|
-
|
|
(587,865)
|
||||||||
Balance,
March
31, 2010
|
-
|
$
|
-
|
80,000,000
|
$
|
80,000
|
$
|
464,892
|
$
|
(215,710)
|
$
|
(517,024)
|
$
|
6,153
|
$
|
|
(181,689)
|
Note
1 Basis
of Presentation
While the
information presented in the accompanying interim consolidated financial
statements is unaudited, it includes all adjustments which are, in the opinion
of management, necessary to present fairly the financial position, results of
operations and cash flows in the interim periods presented. Except as
disclosed below, these interim consolidated financial statements follow the same
accounting policies and methods of their application as Brazil Gold Corp.
(formerly Dynamic Alert Limited’s) audited June 30, 2009 annual financial
statements. It is suggested that these interim consolidated financial
statements be read in conjunction with Brazil Gold Corp. (formerly Dynamic Alert
Limited’s) June 30, 2009 audited financial statements.
The
information as of June 30, 2009 is taken from the audited financial statements
of this date.
Note
2 Basis
of Presentation – Going Concern
The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of America,
which contemplates our continuation as a going concern. However, the
Company has negative working capital and a stockholders’ deficit and has losses
to date of approximately $733,000. These matters raise substantial
doubt about our ability to continue as a going concern. In view of
these matters, realization of certain of the assets in the accompanying
consolidated balance sheet is dependent upon the Company’s ability to meet its
financing requirements, raise additional capital, and the success of its future
operations. The Company is seeking additional means of financing to
fund its business plan. There is no assurance that the Company will
be successful in raising sufficient funds to assure the eventual profitability
of the Company. Management believes that actions planned and
presently being taken to revise the Company’s operating and financial
requirements provide the opportunity for the Company to continue as a going
concern. The consolidated financial statements do not include any
adjustments that might result from these uncertainties.
Note
3 Income
Taxes
We are
subject to U.S. federal income taxes. We have had losses to date, and
therefore, have paid no income tax.
Deferred
income taxes arise from temporary timing differences in the recognition of
income and expenses for financial reporting and tax purposes. Our
deferred tax assets consist entirely of the benefit from net operating loss
(“NOL”) carry forwards. Our deferred tax assets are offset by a
valuation allowance due to the uncertainty of the realization of the NOL carry
forwards. The net operating loss carry forward, if not used, will
expire in various years through 2009. NOL carry forwards may be
further limited by a change in company ownership and other provisions of the tax
laws.
The
Company’s deferred tax assets, valuation allowance and change in valuation
allowance are as follows:
Period
Ending
|
Estimated
NOL Carry forward
|
NOL
Expires
|
Estimated
Tax Benefit from NOL
|
Valuation
Allowance
|
Change
in Valuation Allowance
|
Net
Tax Benefit
|
||||
June
30, 2009
|
144,869
|
Various
|
36,217
|
(36,217)
|
(8,922)
|
—
|
||||
March
31, 2010
|
732,734
|
Various
|
183,184
|
(183,184)
|
(146,967)
|
-
|
Income
taxes at the statutory rate are reconciled to our actual income taxes as
follows:
Income
tax benefit at statutory rate resulting from NOL carry
forwards
|
(25%)
|
|
Deferred
income tax valuation allowance
|
25%
|
|
Actual
tax rate
|
0%
|
Note
4 Advances
Receivable
As of
March 31, 2010, the company had a total of $14,357 invested in advances
receivable which are uncollateralized. The advances receivable are
non-interest bearing.
The book
value of these financial instruments is representative of their fair
values. These advances are for funds advanced to Rusheen Handels AG,
a Swiss corporation ("Rusheen"), with whom the Company is in negotiations and
doing due diligence to acquire Rusheen’s 99% interest in its
Brazilian subsidiary Amazônia Capital e Participações Ltda.
(“ACP”).
Note
5 Note
Receivable
The
Company carries its note receivable at cost or loan balance, subject to the
valuation procedures as described below. The book value of these
financial instruments is representative of their fair values. These
notes are for funds advanced to Rusheen Handels AG, a Swiss corporation
("Rusheen"), with whom the Company is in negotiations and doing due diligence to
acquire Rusheen’s 99% interest in its Brazilian subsidiary Amazônia Capital e
Participações Ltda. (“ACP”)
As of
March 31, 2010, the company had a total of $822,000 invested in notes
receivable. The notes are uncollateralized and bear interest at 12 %
effective January 2, 2010. There is no set maturity
date. Interest is accrued at 12% per annum, calculated monthly
compounded on the notes receivable as earned. Imputed interest of
$19,150 was recorded as of March 31, 2010.
The
Company will maintain a valuation for certain loans that are delinquent, have
significant collateral deficiencies or have other attributes that reduce their
collectability potential. The valuation account is netted against
notes receivable. At March 31, 2010, management determined that no
allowance was necessary.
Note
6 Advances
Payable
As of
March 31, 2010, the company had a total of $66,461 in advances payable that were
uncollateralized, bear no interest, and are due on demand.
Note
7 Accounts
payable, related parties
As of
March 31, 2010, the company had a total of $60,000 in accounts payable to its
officers for consulting fees.
Note
8 Convertible
Debenture
As of
March 31, 2010, the company had a total of $822,000 in advances
payable. On January 2, 2010, the advances payable were collateralized
with convertible promissory notes, bearing interest at 12% per annum, and due in
full July 2011. Imputed interest of $19,150 was recorded as of March
31, 2010.
The face
amount of convertible promissory notes and all interest accrued thereon may be
converted, in whole or in part, any time following the Issuance Date in Holder’s
sole discretion. Upon receipt the Company shall instruct the transfer
agent to deliver stock certificates representing the number of shares of Common
Stock issuable upon such conversion, as applicable. The holder of
convertible promissory notes, is entitled to convert the face amount of such
notes at anytime following the Issuance Date at the lesser of either $1.00 per
share or the average weighted trading price for the 20-day period prior to the
Conversion Date.
The
Company uses the Black-Scholes valuation model to value the convertible
promissory notes. The model requires management to make estimates
which are subjective and may not be representative of actual
results. The guidance on beneficial conversions features applies to
both convertible debt securities and convertible preferred stock. A
beneficial conversion feature is an embedded conversion right that is in the
money, that is, the conversion feature enables the holder to obtain the
underlying common stock at below market price.
In
addition, certain convertible instruments may have a contingently adjustable
conversion ratio that is variable based on future events such as any of the
following:
·
|
A
liquidation or a change in control of the
entity;
|
·
|
A
subsequent round of financing at a price lower than the convertible
instrument's original conversion price;
or
|
·
|
An
initial public offering at a share price lower than an agreed-upon
amount.
|
The
beneficial conversion feature for the quarter ended March 31, 2010 is $13,095
which is recorded as a discount on the debt and amortized on a straight line
basis over the life of the loan. For the quarter ending March 31,
2010 $2,182 was expensed to beneficial conversion feature.
Note
9 Stock
Based Compensation
The
Company accounts for stock-based compensation in accordance with ASC Topic 718,
Compensation – Stock Compensation. Under the fair value recognition
provisions of this pronouncement, stock-based compensation cost is measured at
the grant date based on the value of the award granted, using the Black-Scholes
option pricing model, and recognized over the period in which the award
vests. The stock-based compensation expense included in general and
administrative expenses for the nine months ended March 31, 2010 and 2009 was
$385,362 and Nil, respectively.
On
January 7, 2010, the board approved the 2010 Stock Incentive & Compensation
Plan thereby reserving an additional 8,000,000 common shares for issuance to
employees, directors and consultants, of which 2,750,000 were granted at $0.56
exercise price.
The
options shall be exercisable, in whole or in part, according to the following
vesting schedule:
·
|
Twenty
five percent (25%) of the total number of shares granted under the option
scheme vested immediately as January 7, 2010, the date they were approved
at the board meeting; and
|
·
|
The
remaining seventy-five percent (75%) of the shares granted under the
option scheme shall vest pro rate every six (6) months, on the same date
of the month as the date of grant of the option, over the following
eighteen (18) months of continuous status as a director, employee or
consultant.
|
During
the period ended March 31, 2010 the Company recognized stock based compensation
expense in the amount of $385,362 for the vested portion of options issued
January 7, 2010.
The
Company uses the Black-Scholes option valuation model to value stock options
granted. The Black-Scholes model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. The model requires management to make estimates which
are subjective and may not be representative of actual
results. Changes in assumptions can materially affect estimates of
fair values. For purposes of the calculation, the following
assumptions were used:
Risk
free interest rate
|
1.62%
|
Expected
dividend yield
|
0.0%
|
Expected
stock price volatility
|
110.00%
|
Expected
Life of options
|
3.24
years
|
The
following table summarizes the activity under the Company’s stock option
plan:
Shares
|
Weighted
Average Exercise Price
|
|
Balance,
June 30, 2009
|
-
|
-
|
Options
granted for the period
|
2,750,000
|
$0.56
|
Options
cancelled
|
-
|
-
|
Options
exercised
|
-
|
-
|
Balance,
March 31, 2010
|
2,750,000
|
$0.56
|
Options
vested at March 31, 2010
|
687,500
|
$0.56
|
Note
10 Discontinued
Operations and New Developments
The
Company’s attempts over the past years to build a business that assists
consumers with their security needs had not come to fruition so management
decided to change the business focus and look for other
opportunities. Therefore, management decided to discontinue its
security business and reflect such discontinuance in its operating statement and
cash flow statements effective January1, 2010.
Management
decided on that date to focus on new business development in the form of mineral
exploration, having commenced its due diligence exercise in November 2009, which
is still in progress, to acquire the a 99% ownership interest in a Brazilian
subsidiary Amazônia Capital e Participações Ltda. (“ACP”) in exchange for
restricted shares of the Company's common stock and a 2.5% net smelter return
royalty on mineral production from ACP mineral claims located in
Brazil. The primary mineral target is gold, however copper, nickel,
iron ore, manganese and tin are also found in the area. The legal
claims are located in three western states: Amazonas, Mato Grosso and
Rondônia.
During
the nine month period ending March 31, 2010 and the nine month period ending
March31, 2009, the Company had $3,840 and $3,120 in revenue, respectively,
related to its discontinued operations.
Three-month
Period
ending
March
31,
2010
|
Three-month
Period
ending
March
31,
2009
|
Nine-month
Period
ending
March
31,
2010
|
Nine-month
Period
ending
March
31,
2009
|
|||||
Revenue
|
$
|
-
|
$
|
3,120
|
$
|
3,840
|
$
|
3,120
|
Expenses
|
||||||||
Depreciation
and amortization
|
-
|
388
|
-
|
1,163
|
||||
Office
and administration
|
-
|
74
|
7
|
238
|
||||
Consulting
|
-
|
-
|
-
|
3,072
|
||||
-
|
462
|
7
|
4,473
|
|||||
Net
Profit (Loss)
from
Discontinued Operations
|
$
|
-
|
$
|
2,658
|
$
|
3,833
|
$
|
(1,353)
|
Note
11 Subsequent
Events
On April
06, 2010 Brazil Gold Corp. announced that it has entered into a bridge financing
arrangement with a US-based private company for another $1,000,000, for an
aggregate of up to $2,000,000 in funding. This was set up in order to
be prepared upon the successful completion of the due diligence to acquire ACP
that funding for up to $2,000,000 be available to allow the Company to commence
with implementation of the operations and exploration strategy. Under
the terms of the agreement the Company has the right to call upon funds for up
to $2,000,000 by issuing convertible notes to the lender. The notes
are convertible into shares of the Company’s common stock at prices ranging
between $1.00 and $1.50 per common share. The securities to be issued
under the agreement will not be registered under the Securities Act of 1933 and
may not be offered or sold in the United States absent a registration or an
applicable exemption from the registration requirements.
The
Company has evaluated all subsequent events through the date the financial
statements were available to be issued.
ITEM
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We
incorporated as Dynamic Alert Limited (referred to herein as “we”, “us”, “our”
and similar terms) on June 17, 2004, in the State of Nevada. Our name
was changed from Dynamic Alert Limited to Brazil Gold Corp. on March 15,
2010. Our principal executive offices are located at 800 Bellevue
Way, Suite 400, Bellevue, WA, USA 98004. Our telephone number is
(425)637-3080. Our fiscal year end is June 30.
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
Over the
last two (2) years, we have continued to build a business that assists consumers
with their security needs. Our goal had been to help our customers
create and implement a personalized security plan by offering a three-fold
service. Our first focus was to assist our clients in developing
personalized security plans. Our second focus was to source and
market personal security products. Our third focus was to provide
personal protection on an as-needed basis. We were actively seeking
to add new products and/or services that we could offer. The results
were lack-luster, so it was decided to change our business focus and look for
other opportunities and discontinue the security operation with effect from
January 1, 2010. Therefore, we now continued to review mineral
exploration opportunities with the objective of bringing additional revenue to
the Company.
It is for
this reason that on November 13, 2009, the Company entered into a Letter of
Intent with Rusheen Handels AG, a Swiss corporation ("Rusheen") for the
acquisition by the Company of Rusheen's 99% ownership interest in its Brazilian
subsidiary Amazônia Capital e Participações Ltda. (“ACP”) in exchange for (a) 44
million restricted shares of the Company's common stock and a 2.5% net smelter
return royalty on mineral production from ACP mineral claims located in Brazil.
ACP is the owner of numerous poly-metallic mineral claims covering approximately
824,411 hectares (2,037,119 acres) in three states in the Tapajos Greenstone
Belt in the Amazon Basin of Brazil. The primary mineral target is
gold, but copper, nickel, iron ore, manganese and tin are also found in the
area. The legal claims are located in three western states: Amazonas,
Mato Grosso and Rondonia.
The
consideration to be payable to Rusheen for transfer of the ACP ownership stake
is 44 million restricted shares in the common stock of the Company, and a 2.5%
NSR on mineral production from the ACP claims.
The
agreement to acquire Rusheen's ownership interest in ACP is contingent on the
parties entering into a written definitive acquisition agreement, approval by
both parties' board of directors and upon the completion of a due diligence
investigation by each party. If the business combination is completed
this will result in a change of control of the Company.
On
January 7, 2010, the Board of Directors of Brazil Gold Corp. adopted a 2010
Stock Option Plan, which plan authorizes the issuance of up to ten percent (10%)
of the Company’s total issued and outstanding shares of common stock to the
Company’s officers, directors, employees, advisors and consultants.
On
January 7, 2010, the Company’s Board of Directors also granted to officers and
directors under the above plan options to purchase a total of 2.75 million
shares at an exercise price per share of $0.56 of which 25% were vested
immediately and the remainder at six months intervals.
On March
15, 2010 Dynamic Alert Ltd. (the “Company”) announced its change-of-name to
Brazil Gold Corp., and new trading symbol “BRZG”, effective
immediately. This change of name to Brazil Gold Corp. was made to
more accurately reflect the new focus and vision of the Company – to be an
explorer for precious metals, most significantly gold, in Brazil upon the
successful completion of the due diligence to acquire ACP as more fully set out
above. This name change was achieved by combining the business of the
Company and its subsidiary Brazil Gold Corp., which was specifically set up to
protect this name.
Material
Changes in Financial Condition
At March
31, 2010, we had a working capital deficit of ($1,023,839), compared to a
working capital deficit of ($13,954), at June 30, 2009. At March 31,
2010, our total assets consisted of notes receivable of $841,150, advances
receivable of $14,357, website development of $1,000 and prepaid expenses of
$125. This compares with total assets at June 30, 2009 consisting of
cash of $170, prepaid expenses of $679 and capital assets of $823. These
material changes have arisen as a result of the Company having raised funds in
the form of uncollateralized loans, As at March 31, 2010 $822,000 of the
advances payable were collateralized with convertible promissory notes, bearing
interest at 12% per annum, and due in full July 2011. Refer to note 5
in the financial statements.
These
funds advanced to Rusheen, a Swiss corporation, with whom the Company is in
negotiations and doing due diligence to acquire Rusheen’s 99%
interest in its Brazilian subsidiary Amazônia Capital e Participações Ltda.
(“ACP”), so that ACP has working capital to fund its property taxes and on-going
expenses to ensure it retains such mineral rights. Refer to note 5 in
the financial statements.
At March
31, 2010, our total current liabilities increased to $1,038,321 from $14,803 at
June 30, 2009. During the 9 months ended March 31, 2010, accounts
payable, accrued liabilities, and advances payable increased by
$193,281.
We
recognized $3,840 in revenues from discontinued operations during the nine
months ending March 31, 2010.
As we do
not have an existing cash balance, we do not have sufficient funds to carry out
normal operations over the next three (3) months. Our short and
long-term survival is dependent on funding from sales of securities as necessary
or from shareholder loans, and thus, to the extent that we require additional
funds to support our operations or the expansion of our business, we may attempt
to sell additional equity shares or issue debt. Any sale of
additional equity securities will result in dilution to our
stockholders. Recent events in worldwide capital markets may make it
more difficult for us to raise additional equity or capital. There
can be no assurance that additional financing, if required, will be available to
us or on acceptable terms.
Material
Changes in Results of Operations
For
The Three Months Ended March 31, 2010, Compared To The Three Months Ended March
31, 2009.
There
were no revenues from the discontinued operations of the sale of security
products and services during the three months ending March 31, 2010, compared to
$3,120 revenues during the three months ended March 31, 2009.
For the
three months ended March 31, 2010, operating expenses were $517,024 compared to
$3,787 during the three months ended March 31, 2009. The increase was
principally due to an increase in our professional and consulting fees for due
diligence work being carried out on the ACP operations in Brazil as well as
stock based compensation on share options granted.
Operating
expenses during the three months ended March 31, 2010, consisted of professional
fees of $19,120, (2009: $3,475) consulting fees of $96,223 (2009: nil) office
and administration expenses of $10,185, (2009: $387) travel expenses $3,951
(2009: nil) stock based compensation of $385,362 (2009:nil), and beneficial
conversion feature of $2,182 (2009:nil).
During
the three month period ended March 31, 2010, we recognized a net loss of
$517,024 compared to a net loss of $1,129 for the three-month period ended March
31, 2009. The increased loss of $515,895 was due to an increase in
our activities over the prior period as discussed above.
For
The Nine Months Ended March 31, 2010, Compared To The Nine Months Ended March
31, 2009.
There was
$3,840 revenue from our discontinued operations of the sale of security products
and services during the nine months ending March 31, 2010, compared to $3,120
revenues during the nine months ended March 31, 2009.
For the
nine months ended March 31, 2010, operating expenses were $592,075 compared to
$20,411 during the nine months ended March 31, 2009. The increase was
principally due to an increase in our professional and consulting fees for due
diligence work being carried out on the ACP operations in Brazil as well as
stock based compensation on share options granted.
Operating
expenses during the nine months ended March 31, 2010, consisted of professional
fees of $64,725, (2009: $15,857) consulting fees of $118,723 (2009: nil) office
and administration expenses of $15,357, (2009: $4,554), travel expenses of
$5,726 (2009: nil), stock based compensation of $385,362 (2009:nil), and
beneficial conversion feature of $2,182 (2009:nil).
During
the nine month period ended March 31, 2010, we recognized a net loss of $587,865
compared to a net loss of $21,764 for the nine month period ended March 31,
2009. The increased loss of $566,101 was due to an increase in our
activities over the prior period as discussed above.
Off-Balance
Sheet Arrangements
We
currently do not have any off-balance sheet arrangements.
ITEM
3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
As a
"smaller reporting company" as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item.
ITEM
4. CONTROLS AND PROCEDURES
As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the 1934 Act is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms.
ITEM
4T. CONTROLS AND PROCEDURES
Management's
Quarterly Report on Internal Control over Financial Reporting.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.
Management's
assessment of the effectiveness of the small business issuer's internal control
over financial reporting is as of the quarter ended March 31,
2010. We believe that our internal control over financial reporting
was not effective due to material weaknesses in the system of internal
control. Specifically, management identified the following control
deficiency:
·
|
The
Company uses accounting software that does not prevent erroneous or
unauthorized changes to previous reporting periods and does not provide an
adequate audit trail of entries made in the accounting
software.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
This
quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management's report in this annual report.
There was
no change in our internal control over financial reporting that occurred during
the fiscal quarter ended March 31, 2010, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
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. REMOVED
AND RESERVED
None.
ITEM
5. OTHER
INFORMATION
ITEM
6. EXHIBITS
Pursuant
to Rule 601 of Regulation S-B, the following exhibits are included
herein.
Exhibit
Number Description
31.1 CERTIFICATION
OF CEO PURSUANT TO 18 U.S.C. ss. 1350, SECTION 302
31.2 CERTIFICATION
OF CFO PURSUANT TO 18 U.S.C. ss. 1350, SECTION 302
32.1 CERTIFICATION
PURSUANT TO 18 U.S.C. ss. 1350, SECTION 906
32.2 CERTIFICATION
PURSUANT TO 18 U.S.C. ss. 1350, SECTION 906
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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, on this 14 day of May,
2010.
BRAZIL
GOLD CORP.
Date: May
14,
2010 By:
/s/
Dr.
Thomas E. Sawyer
Name: Dr.
Thomas E. Sawyer
Title:
Chairman of the Board/Chief Executive Officer, principal executive officer and
Secretary
Date: May
14
2010 By:
/s/
J Roland Vetter
Name: J
Roland Vetter
Title:
Chief Financial Officer/Principal Financial Officer, principal accounting
officer