MV Portfolios, Inc. - FORM 10-Q

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EX-32.1 - MV Portfolios, Inc.	v205820_ex32-1.htm
EX-31.1 - MV Portfolios, Inc.	v205820_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 31, 2010

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

For the transition period from _______ to _______

Commission File Number: 333-134549

CALIFORNIA GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

Nevada	83-483725
(State of Incorporation)	(IRS Employer Identification No.)

c/o Gottbetter & Partners, LLP

488, Madison Avenue, 12th Floor, New York, NY 10022

(212) 400-6900

(Address of principal executive offices and telephone number)

Indicate whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act 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. Yes x 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company þ
				(Do not check if a smaller Reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

There were 62,063,000 shares of common stock issued and outstanding as of December 14, 2010.

CALIFORNIA GOLD CORP.

INDEX

	Page
Part I Financial Information

Item 1 Financial Statements	2

Balance Sheets (unaudited)	3

Statements of Operations (unaudited)	4

Statements of Cash Flows (unaudited)	5

Notes to the Financial Statements (unaudited)	6

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 4 Controls and Procedures	14

Part II Other Information	17

Item 2 Unregistered Sale of Equity Securities and Use of Proceeds	17

Item 6 Exhibits	17

Signatures	18

Exhibit – Certification of Principal Executive Officer and Principal Financial Officer

Exhibit – Certification of Chief Executive Officer and Chief Financial Officer

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial statements of California Gold Corp. (the “Company”) required to be filed with this Quarterly Report on Form 10-Q were prepared by management and commence on the following page, together with the related Notes. In the opinion of management, these financial statements fairly present the financial condition of the Company, but should be read in conjunction with the financial statements of the Company for the period ended January 31, 2010, previously filed on Form 10-K with the Securities and Exchange Commission, File No. 333-134549.

CALIFORNIA GOLD CORP.

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS

(UNAUDITED)

	OCTOBER 31, 2010			JANUARY 31, 2010
ASSETS

Current Assets:
Cash	$	989		$	373
Total Current Assets		989			373

Total Assets	$	989		$	373

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable – trade	$	59,805		$	29,519
Accounts payable - related party		253,601			175,394
Notes and interest payable to related parties, net		78,528			21,072
Derivative liabilities		78,811			-
Total Current Liabilities		470,745			225,985
Stockholders' Deficit:
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 62,063,002 and 58,063,000 shares issued and outstanding as of October 31, 2010 and as of January 31, 2010, respectively		62,063			58,063
Additional paid-in capital		1,175,631			960,005
Deficit accumulated during the exploration stage		(1,707,450	)		(1,243,680	)
Total Stockholders' Deficit		(469,756	)		(225,612	)
Total Liabilities and Stockholders' Deficit	$	989		$	373

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

CALIFORNIA GOLD CORP.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS

(UNAUDITED)

													April 19, 2004
													(Inception)
	Three Months Ended						Nine Months Ended						through
	October 31, 2010			October 31, 2009			October 31, 2010			October 31, 2009			October 31, 2010
Revenues	$	-		$	-		$	-		$	-		$	-

Cost of Sales		-			-			-			-			-

Gross Margin		-			-			-			-			-

Operating Expenses

Mineral property expenses		-			-			-			-			27,206

Bad debt expense		-			-			-			-			557,927

General and administrative		266,039			63,290			394,377			169,063			1,052,802

Total Operating Expenses		266,039			63,290			394,377			169,063			1,637,935

Loss from Operations		(266,039	)		(63,290	)		(394,377	)		(169,063	)		(1,637,935	)
Other Income (Expenses):

Interest expense, net		(1,281	)		-			(2,337	)		1			(2,459	)
Change in fair value of derivatives		(67,056	)		-			(67,056	)		-			(67,056	)
Total Other Income (Expenses)		(68,337	)		-			(69,393	)		1			(69,515	)

Loss before Income Taxes		(334,376	)		(63,290	)		(463,770	)		(169,062	)		(1,707,450	)

Provision for Income Taxes		-			-			-			-			-

Net Loss	$	(334,376	)	$	(63,290	)	$	(463,770	)	$	(169,062	)	$	(1,707,450	)

Loss Per Common Share:
Loss per common share - Basic and Diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		58,766, 299			58,313,002			58,298,296			58,313,002

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

CALIFORNIA GOLD CORP.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

							April 19, 2004
							(Inception)
	Nine Months Ended						through
	October 31, 2010			October 31, 2009			October 31, 2010
Operating Activities:
Net loss	$	(463,770	)	$	(169,062	)	$	(1,707,450	)
Adjustments to reconcile net loss to net cash used by operating activities:
Contributed capital for donated services		-			-			235,668
Common stock issued for services rendered		220,000			-			253,000
Bad debt expense		-			-			557,927
Change in fair value of derivatives		67,056						67,056
Amortization of debt discount		716			-			716
Changes in assets and liabilities:
Accounts payable -trade		30,286			15,486			59,805
Accounts payable - related party		78,207			141,706			253,601
Interest accrued on notes payable from related parties		1,621			-			1,763

Net Cash (Used in) Operating Activities		(65,884	)		(11,870	)		(277,914	)
Investing Activities:
Note receivable - related party		-			-			(557,927	)
Net Cash (Used in) Investing Activities		-			-			(557,927	)
Financing Activities:
Proceeds from related party loans		66,500			10,930			87,430
Proceeds from common stock issued		-			-			749,400
Net Cash Provided by Financing Activities		66,500			10,930			836,830

Net Increase (Decrease) in Cash		616			(940	)		989
Cash - Beginning of Period		373			4,113			-
Cash - End of Period	$	989		$	3,173		$	989

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for :
Interest	$	-		$	-		$	-
Income taxes		-			-			-

Noncash Investing and Financing Activities:
Loss on extinguishing of debt owed to related parties recorded in additional paid-in capital	$	374		$	-		$	374
Debt discount due to derivative liabilities		9,618			-			9,618

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

(1) Organization and Description of Business

California Gold Corp. (“California Gold” or the “Company”) is a Nevada corporation in the exploration stage. The Company was incorporated on April 19, 2004 as Arbutus Resources, Inc. The Company was organized to be engaged in the acquisition and exploration of mineral properties. On August 9, 2007, the Company changed its name to US Uranium, Inc. On March 9, 2009, the Company changed its name to California Gold Corp.

(2) Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements of California Gold Corp. 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, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. 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 interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ending January 31, 2010, as reported in Form 10-K, have been omitted.

Derivative Financial Instruments

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value Measurements

Effective January 1, 2008, the Company adopted FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy defined by FASB ASC 820 are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of October 31, 2010.

	October 31, 2010
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total

LIABILITIES:
Derivative liabilities	$	-	$	-	$	78,811	$	78,811

The Company does not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows.

(3) Exploration Stage Activities and Going Concern

The Company is currently in the exploration stage and has engaged in limited operations. While management of the Company believes that it will be successful in its planned capital formation and operating activities, there can be no assurance that the Company will be successful in the development of its planned objectives and generate sufficient revenues to earn a profit or sustain the operations of the Company.

The Company’s activities through October 31, 2010, have been supported by debt and equity financing. It has sustained losses in all previous reporting periods, with a cumulative since inception loss of $1,707,450 as of October 31, 2010. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger, or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception and its cash resources are insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

(4) Related Party Transactions

Between September 2009 and October of 2010, an officer and three stockholders loaned the Company an aggregate of $31,500 for working capital purposes. The loans bore interest between 0% and 10%, matured between October 2010 and September 2011 and were unsecured. In September 2010, two of the related party non-interest bearing loans, totaling $5,000, matured. The two loans were modified in September 2010 whereby the maturity dates were extended from September 9, 2010 to September 9, 2011. The company evaluated the modification under FASB ASC 470-50 and determined they did not qualify as extinguishments of debt.

On October 13, 2010, the aforementioned loans issued to an officer and three stockholders by the Company in 2009 and 2010, totaling $31,500, were amended to require their mandatory conversion, without interest, at a conversion price of $0.025 per share upon the initial closing of a private placement offering in which the Company is currently engaged. As of December 15, 2010, the initial closing had not occurred. In addition, the interest rates on all of the notes were reduced to zero and the accrued interest on the notes totaling $1,511 was forgiven.

The company evaluated the aforementioned loan modifications under FASB ASC 470-50 and determined the modifications qualified as an extinguishment of debt due to a substantive conversion option being added. In accordance with FASB ASC 470-50-40-2, the extinguishment of debt was accounted for as a capital transaction. A gain on the extinguishment of $1,511 was recorded as additional paid-in capital. The company also evaluated the conversion options under FASB ASC 815-15 for derivative treatment and determined the conversion options are not required to be accounted for as derivatives.

In June 2010, a stockholder loaned the Company $10,000 for working capital purposes. The loan was unsecured, bore interest of 10 percent per annum, and was initially due in June 2011. On September 16, 2010, this loan was modified whereby the interest rate was reduced to zero and the term of the loan was revised to September 2011. In addition, a conversion option was added whereby the note is convertible at the holder’s option at $0.03 and mandatorily convertible at a lower rate of $0.025 upon the initial closing of a private placement offering in which the Company is currently engaged. As of December 15, 2010, the initial closing had not occurred.

The company evaluated the aforementioned loan modification under FASB ASC 470-50 and determined the modification qualified as an extinguishment of debt due to a substantive conversion option being added. The company also evaluated the conversion option under FASB ASC 815-15 for derivative treatment and determined the conversion option is required to be accounted for as a derivative due to the conversion rate reset provision. The issuance date fair value of the conversion option was determined to be $2,137 (see Note 5). In accordance with FASB ASC 470-50-40-2, the extinguishment of debt was accounted for as a capital transaction. A net loss on the extinguishment of $1,885 was recorded as additional paid-in capital.

On September 16, 2010, the Company issued related party convertible notes totaling $45,000 to an officer and two stockholders. The convertible notes are non-interest bearing, mature in one year, and are convertible at the option of the borrower into common shares at a conversion rate of $0.03 per share. In addition, the notes are mandatorily convertible at a lower rate of $0.025 upon the initial closing of a private placement offering in which the Company is currently engaged. As of December 15, 2010, the initial closing had not occurred.

The company evaluated the aforementioned conversion options under FASB ASC 815-15 for derivative treatment and determined the conversion options are required to be accounted for as a derivative due to the conversion rate reset provisions. The issuance date fair value of the conversion options was determined to be $9,618 (see Note 5). This original fair value was recorded as a discount on the notes and is being amortized over the life of the notes using the effective interest rate method. During the nine months ended October 31, 2010, amortization of $716 was recorded on the discount.

(5) Derivative Liabilities

As discussed in Note 4, $55,000 in outstanding convertible notes qualify for derivative treatment under FASB ASC 815-15 due to conversion rate reset provisions. The Company estimated the fair value of these liabilities on September 16, 2010 to be $11,755. $2,137 was included in the gain/loss determination for extinguished debt and $9,618 was recorded as a discount on the associated debt.

The derivative liabilities were fair valued on October 31, 2010 at $78,811 resulting in a loss on the change in fair value of $67,056 for the nine months ended October 31, 2010.

The Company used the Black-Scholes option pricing model to estimate the fair values with the following assumptions: the market price of the Company’s common stock on the measurement dates of $0.01 and $0.05, no expected dividend yield; expected volatilities ranging from 246% to 285%; risk-free interest rates of 0.25%; and expected terms ranging from 1 to 0.9 years.

(6) Common Stock Warrants

A summary of the warrant activity during the nine months ended October 31, 2010, is as follows:

	For the Nine Months Ended
	October 31, 2010
			Weighted
			Average
			Exercise
Description	Shares		Price
Outstanding at January 31, 2010		1,190,000	$	0.75
Granted		-		-
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at October 31, 2010		1,190,000	$	0.75

A summary of the status of warrants outstanding as of October 31, 2010, is presented below:

Warrants Outstanding

Warrants Exercisable

Weighted

Range of

Average

Exercise

Number

Remaining

Exercise

Number

Exercise

Prices

Outstanding

Life Years

Price

Exercisable

Price

0.75

1,190,000

1.71

0.75

1,190,000

0.75

No warrants were granted during the nine months ended October 31, 2010.

(7) Stockholders’ Deficit

On October 15, 2010, the Company hired an individual to provide consulting services to the Company for a period of three months. The Company issued 4,000,000 common shares to the individual in payment for the services to be rendered. The shares have a fair value of $220,000 and vested immediately. The Company valued the shares based on market value on the date of the agreement, and recorded the value as stock-based compensation.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe”, “expects”, “anticipates”, “intends”, “estimates”, “projects”, “target”, “goal”, “plans”, “objective”, “should”, or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, our ability to identify and successfully participate in any future acquisition, joint venture or other new business initiative.

OVERVIEW

We were incorporated on April 19, 2004, as Arbutus Resources Inc. under the laws of the state of Nevada. We are an exploration stage company with no revenues and a limited operating history. We were organized to be engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits we discovered that demonstrated economic feasibility.

As previously reported, on June 22, 2007, we loaned $545,000 (and another $50,000 on June 28, 2007) in bridge financing (“Bridge Loan”) to Cromwell Uranium Holdings, Inc. (“Holdings”), a corporation with which we were contemplating a reverse triangular merger. To finance the Bridge Loan, we issued $595,000 of our 9% debentures (“Debentures”) pursuant to the exemptions from registration provided by Regulation D and Regulation S of the Securities Act, to a limited number of accredited investors and non-U.S. persons.

On July 11, 2007, a wholly owned subsidiary of ours (“Acquisition Corp.”) merged with and into with Holdings with Holdings as the surviving corporation (the “Merger”), which, in turn, became our wholly owned subsidiary. In connection with the Merger, we issued 31,000,000 shares of our common stock to the pre-Merger stockholder of Holdings.

At the Merger, the Debentures were converted into units of our securities, each consisting of one share of our common stock and one warrant to purchase a share of our common stock. The warrants are immediately exercisable and remain so for a period of five years at an exercise price of $0.75 per share. Also at the Merger, the Bridge Loan was deemed paid.

As a condition to the Merger, we transferred all of our assets, other than the stock of Acquisition Corp., to another of our wholly owned subsidiaries, Arbutus Leaseco, Inc. (“Leaseco”). At the Merger, we sold all the capital stock of Leaseco to Karen Law and Lyle Smith, our former directors, in exchange for the capital stock of ours that each owned, 44,450,000 shares in the aggregate.

The parties subsequently determined to unwind the transactions and return Holdings to its status as a privately held company (the “Unwinding”). Accordingly, effective August 8, 2007, the parties entered into a Reversal Agreement pursuant to which we sold the shares of Holdings back to its former stockholder in exchange for the return to treasury of the 31,000,000 shares of our common stock issued in the Merger. As additional consideration for the purchase and sale of the shares of Holdings, Holdings agreed to repay to us the entire net principal amount of the Bridge Loan it had received, together with certain expenses incurred by us, or an aggregate of $557,927.

Holdings issued us a promissory note (the “Note” and, together with related documents, the “Loan Documents”) in connection with the loan (the “Loan”) of the $557,927 principal balance of net funds advanced by us. The Note was due on November 15, 2007 (the “Due Date”), and bore interest at the rate of 9% per annum. The Note was secured by a perfected security interest and first priority lien on all of the assets of Holdings, as well as by the deposit into escrow of all of the issued and outstanding shares of Holdings.

Holdings was to begin making consecutive monthly interest-only payments on the Note of accrued interest commencing 30 days from the closing of the Loan through the Due Date, at which time Holdings was required to repay the unpaid principal amount of the Note, together with accrued and unpaid interest.

Holdings defaulted on the Note which caused an increase to the interest rate from 9% to 15% per annum. As of January 31, 2009, we determined that Holdings did not intend to repay the Note and accrued interest and we recorded an allowance for doubtful accounts for the full amount of the Note.

Since completion of the Unwinding, we have redirected our focus towards identifying and pursuing options regarding the development of a new business plan and direction. We intend to explore various business opportunities that have the potential to generate positive revenue, profits and cash flow in order to financially accommodate the costs of being a publicly held company. However, we cannot assure you that there will be any other business opportunities available, or of the nature of any business opportunity that we may find, or of the financial resources required of any possible business opportunity.

Mexivada - Aurotellurio

On October 7, 2010, we signed a letter of intent (“LOI”) with Mexivada Mining Corp. (“Mexivada”) to acquire an 80% interest in Mexivada’s La Viuda and La Viuda-1 concessions comprising its AuroTellurio tellurium-gold-silver property (the “Property”) in Moctezuma, Sonora, Mexico. The transaction envisioned in the LOI is subject to legal and financial due diligence by us, which we expect to complete by the end this fiscal year.

RESULTS OF OPERATIONS

For the nine months ended October 31, 2010 and since our date of inception, we have not generated any revenues.

We incurred total operating expenses of $266,039 and $394,377 for the three and nine month periods ended October 31, 2010, respectively, as compared to total operating expenses of $63,290 and $169,063 for the three and nine month periods ended October 31, 2009, respectively. These expenses consisted of general and administrative expenses incurred in connection with the day-to-day operation of our business and the preparation and filing of our periodic reports. These expenses consisted of professional and legal fees incurred in connection with the filing of periodic reports, SEC compliance filings, audit and accounting fees, and general corporate matters. We incurred mineral property expenses of $-0- for the three and nine month periods ended October 31, 2010, and 2009.

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 2010, we had $989 in our bank account.

On September 16, 2010, our sole officer and three of our stockholders loaned us a total of $55,000 for working capital purposes. These loans were evidenced by 0% convertible notes (1) convertible, at the option of the holder, at a price of $0.03 per share, or, on a mandatory basis, at the closing of our next private placement of our securities resulting in gross proceeds to us of at least $500,000 at a price of $0.025 per share, or (2) to be repaid on or before the first anniversary of the date of issuance (unless otherwise extended), whichever occurs first.

As discussed above, we are owed the entire $557,927 principal balance of the Note issued to us by Holdings, plus accrued interest. However, Holdings is in default under the Note, and we are currently unable to determine the likelihood that the Note will be repaid. During the year ended January 31, 2009, we recorded an allowance for doubtful accounts of $557,927 with respect to the Note.

We are an exploration stage company and currently have no operations. Our independent auditors have issued an audit opinion for us which includes a statement expressing substantial doubt as to our ability to continue as a going concern.

We do not have sufficient funds on hand to pursue our business objectives for the near future, to commence operations or to complete, if we decide to do so, the acquisition of the Aurotellurio Preperty without seeking additional funding. We expect to obtain such funding through the private placement of our securities.

We have minimal operating costs and expenses at the present time due to our limited business activities. We will, however, be required to raise additional capital over the next twelve months to meet our current administrative expenses and to complete, if we decide to do so, the acquisition of the Aurotellurio Preperty, and we expect do so in connection with or in anticipation of other possible acquisition transactions. This financing may take the form of additional sales of our equity securities to, or loans from, our sole officer, existing stockholders, or additional third parties. There is no assurance, however, that additional financing will be available at all or on terms favorable to us.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

SIGNIFICANT ACCOUNTING POLICIES

It is suggested that these financial statements be read in conjunction with our January 31, 2010, audited financial statements and notes thereto, which can be found in our Form 10-K filing on the SEC website at www.sec.gov under our SEC File Number 333-134549.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

The management of California Gold Corp. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our senior management, consisting of James D. Davidson, our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, our sole officer concluded that, during the period covered by this quarterly report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of October 31, 2010; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:

We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.

We did not maintain proper segregation of duties for the preparation of our financial statements. We currently only have one officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies:

Management believes that the material weaknesses set forth the two items above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management's Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate the following series of measures once we have raised sufficient capital to do so:

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, would remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

Changes in Internal Controls over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II

OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 6. EXHIBITS

The following exhibits are included with this quarterly report.

Exhibit
Number		Description
31.1		Certification of Principal Executive and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

____________________

* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 16, 2010	California Gold Corp.

	By	/s/ James D. Davidson
		James D. Davidson
		President, Treasurer, Principal
		Executive Officer, Principal
		Financial Officer

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