Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - GRN Holding Corp | Financial_Report.xls |
| EX-32.02 - GRN Holding Corp | ex32-02.htm |
| EX-32.01 - GRN Holding Corp | ex32-01.htm |
| EX-31.01 - GRN Holding Corp | ex31-01.htm |
| EX-31.02 - GRN Holding Corp | ex31-02.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2011
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to _______
Commission File Number 000-54709
DISCOVERY GOLD CORPORATION
(Name of small business issuer in its charter)
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Nevada
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27-2616571
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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2817 NE 32 STREET, #201
FORT LAUDERDALE, FL 33306
(Address of principal executive offices)
(954) 683-3766
(Registrant’s telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
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 x No o (Not required)
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.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of December 14, 2011, there were 47,000,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.
DISCO VERY GOLD CORPORATION
(Formerly Known As NORMAN CAY DEVELOPMENT, INC. )*
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TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
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3
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ITEM 2.
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14
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ITEM 3.
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16
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ITEM 4.
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16
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PART II.OTHER INFORMATION
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ITEM 1.
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17
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ITEM 1A.
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17
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ITEM 2.
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17
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ITEM 3.
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17
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ITEM 4.
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17
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ITEM 5.
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17
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ITEM 6.
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18
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Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q/ A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Discovery Gold Corporation (formerly known as Norman Cay Development, Inc.) (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, except as otherwise indicated by the context, references in this report to “Company”, “DCGD”, “we”, “us” and “our” are references to Discovery Gold Corporation.
EXPLANATORY NOTE
This Amendment No. 1 to our Quarterly Report on Form 10-Q/A (“Amendment No. 1”) is being filed to amend our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on December 20, 2011 (“Original Filing”). The amendments are set forth below:
The Company restated the financial statements for the quarter ended October 31, 2011 due to the Company’s change in treatment for the amount of $4,650,000, which should be expensed because it represents a related party transaction. The Company has also determined that investment in Discovery Gold Ghana Ltd is impaired and the Company is doubtful of collectability of the compensation received from North Springs Resources.
Except to the extent required to reflect the above-referenced revisions, this Amendment No. 1 continues to describe the Company as of the date of the Original Filing, and does not update disclosures to reflect events that occurred after the date of the Original Filing. Accordingly, this Amendment No.1 should be read in conjunction with the Original Filing and with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing, including any amendments to those filings.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Consolidated Financial Statements
For the Periods Ended October 31, 2011 (unaudited) and April 30, 2011
DIS COVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Consolidated Balance Sheets
(unaudited)
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October 31, 2011
Restated
$
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April 30,
2011
$
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|||||||
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ASSETS
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||||||||
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Cash
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11,928 | 71,160 | ||||||
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Total Current Assets
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11,928 | 71,160 | ||||||
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Mineral property
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510,000 | – | ||||||
| 521,928 | 71,160 | |||||||
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LIABILITIES
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Current Liabilities
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||||||||
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Accounts payable and accrued liabilities
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173,410 | 36,963 | ||||||
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Due to related parties
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25,100 | 100 | ||||||
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Note payable
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165,416 | 65,416 | ||||||
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Total Liabilities
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363,926 | 102,479 | ||||||
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STOCKHOLDERS’ EQUITY (DEFICIT)
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||||||||
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Preferred Stock
Authorized: 10,000,000 preferred shares with a par value of $0.001 per share Issued and outstanding: nil preferred shares
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– | – | ||||||
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Common Stock
Authorized: 250,000,000 common shares with a par value of $0.001 per share Issued and outstanding: 47,000,000 and 97,500,000 common shares, respectively
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47,000 | 97,500 | ||||||
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Additional paid-in capital
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5,198,000 | (22,500 | ) | |||||
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Accumulated deficit during the development stage
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(5,086,998 | ) | (106,319 | ) | ||||
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Total Stockholders’ Equity (Deficit)
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158,002 | (31,319 | ) | |||||
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Total Liabilities and Stockholders’ Equity (Deficit)
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521,928 | 71,160 | ||||||
DISC OVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Consolidated Statements of Operations
(unaudited)
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For the Three
Months Ended
October 31, 2011
Restated
$
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For the Three
Months Ended
October 31,
2010
$
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For the Six
Months Ended
October 31, 2011
Restated
$
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For the Six
Months Ended
October 31,
2010
$
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Accumulated from
April 29, 2010
(Date of Inception) to October 31,
2011
$
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Revenues
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– | – | – | – | – | |||||||||||||||
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Operating Expenses
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Consulting fees
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269,988 | – | 269,988 | – | 269,988 | |||||||||||||||
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General and administrative
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7,903 | 13,835 | 26,964 | 20,148 | 55,925 | |||||||||||||||
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Professional fees
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12,750 | 13,000 | 27,750 | 38,500 | 99,850 | |||||||||||||||
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Total Operating Expenses
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290,641 | 26,835 | 324,702 | 58,648 | 425,763 | |||||||||||||||
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Other Expense
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Interest expense
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4,328 | 1,279 | 5,977 | 2,014 | 11,235 | |||||||||||||||
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Investment impairment
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4,650,000 | 4,650,000 | ||||||||||||||||||
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Net Loss
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(4,944,969 | ) | (28,114 | ) | (4,980,679 | ) | (60,662 | ) | (5,086,998 | ) | ||||||||||
| Net Loss per Share – Basic and Diluted | (0.07 | ) | (0.00 | ) | (0.06 | ) | (0.00 | ) | ||||||||||||
| Weighted Average Shares Outstanding – Basic and Diluted | 76,021,739 | 75,000,000 | 86,760,870 | 75,000,000 | ||||||||||||||||
DISC OVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(unaudited)
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For the Six
Months Ended
October 31, 2011
Restated
$
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For the Six
Months Ended
October 31,
2010
$
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Accumulated from
April 29, 2010
(Date of Inception) to October 31, 2011
Restated
$
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Operating Activities
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Net loss for the period
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(4,980,679 | ) | (60,662 | ) | (5,086,998 | ) | ||||||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Shares issued for services
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260,000 | – | 260,000 | |||||||||
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Investment impairment
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4,650,000 | 4,650,000 | ||||||||||
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Changes in operating assets and liabilities:
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Accounts payable
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11,447 | 11,719 | 48,410 | |||||||||
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Due to related parties
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– | – | 100 | |||||||||
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Net Cash Used In Operating Activities
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(59,232 | ) | (48,943 | ) | (128,488 | ) | ||||||
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Investing Activities
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Purchase of mineral property
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(125,000 | ) | – | (125,000 | ) | |||||||
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Net Cash Used In Investing Activities
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(125,000 | ) | – | (125,000 | ) | |||||||
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Financing Activities
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Proceeds from issuance of common stock
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– | – | 75,000 | |||||||||
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Proceeds from issuance of note payable
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100,000 | 55,488 | 165,416 | |||||||||
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Proceeds from related parties
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25,000 | – | 25,000 | |||||||||
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Net Cash Provided By Financing Activities
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125,000 | 55,488 | 265,416 | |||||||||
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Increase (Decrease) in Cash
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(59,232 | ) | 6,545 | 11,928 | ||||||||
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Cash – Beginning of Period
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71,160 | 4,918 | – | |||||||||
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Cash – End of Period
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11,928 | 11,463 | 11,928 | |||||||||
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Supplemental Disclosures
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Interest paid
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– | – | – | |||||||||
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Income tax paid
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– | – | – | |||||||||
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Non-cash investing and financing activities:
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Issuance of founders’ shares
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– | – | 5,000 | |||||||||
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Issuance of shares to acquire mineral property
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260,000 | – | 260,000 | |||||||||
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Cancellation of common shares
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(69,000 | ) | – | (69,000 | ) | |||||||
DISC OVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
1. Nature of Operations and Continuance of Business
Discovery Gold Corporation (F/K/A Norman Cay Development, Inc.) (the “Company”) was incorporated in the State of Nevada on April 29, 2010. The Company is an Exploration Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. On September 2, 2011, the Company entered into a share exchange agreement (the “Agreement”) with Discovery Gold Ghana Limited (“Discovery”), a company organized under the laws of the country of Ghana. Under the terms of the Agreement, the Company acquired 100% of the issued and outstanding shares of Discovery in exchange for $100,000 and 17,500,000 common shares of the Company.
On September 1, 2011, the Company discontinued its intention of being a retailer or wireless telephones and service plans and changed its operating focus to the acquisition and development of mineral properties in the country of Ghana.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of October 31, 2011, the Company has not recognized any revenue, and has an accumulated deficit of $5,086,998 . The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
a) Basis of Presentation and Principles of Consolidation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and its subsidiary, Discovery Gold Ghana Limited, a company incorporated in Ghana. All significant intercompany transactions and balances have been eliminated. The Company’s fiscal year end is April 30.
b) Use of Estimates
The preparation of financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c) Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
d) Cash and cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
2. Summary of Significant Accounting Policies (continued)
e) Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
f) Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required 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
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, and amounts due to related parties. 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. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
g) Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of October 31 and April 30, 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
2. Summary of Significant Accounting Policies (continued)
h) Mineral Property Costs
The Company has been in the exploration stage since its inception and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized. The Company assesses the carrying costs for impairment under ASC 360, “Property, Plant, and Equipment” at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
i) Asset Retirement Obligations
The Company follows the provisions of ASC 440, “Asset Retirement and Environmental Obligations”, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The Company did not have any asset retirement obligations at October 31, 2011.
j) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
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The Company has restated its previously issued financial statements for matters related for matters related to the following previously reported items:
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No revenue has been recorded on the 10% sale of the Edum Banso option to North Spring Resources Corp. due to the questionable collectability of the remaining $1,000,000 called for in the January 25, 2012 agreement. As the amount has a questionable collectability and therefore does not meet the four revenue recognition criteria of ASC 605 it was determined that the amount of cash received to date ($250,000) should offset the asset value recorded rather than be carried as revenue. In addition, the remaining $1,000,000 was not recorded as a receivable given the questionable collectability. This results in no gain or revenue being recorded on the transaction to date.
On August 27, 2011, the Company entered into an agreement with Xtra Gold Resources for the acquisition of an option in mineral rights in Ghana. The Company agreed to pay Xtra Gold 1,000,000 shares and $250,000 cash, both of which have been paid to date. The shares had a fair value of $0.26per share on August 27, 2011, resulting in a fair value of the shares of $260,000. When combined with the cash the option value is $510,000. On September 2, 2011, the Company entered into an agreement to purchase a Ghana based company, Discovery Gold Ghana, for 17,500,000 shares and $100,000 cash. The shares had a fair value of $0.26 per share on September 2, 2011 resulting in a fair value of the shares of $4,550,000. When combined with the cash the acquisition of Discovery Gold Ghana resulted in an expense of $4,650,000. This amount was expensed as the transaction represents a related party transaction. The amount was not recorded as donated capital as the two companies were not under common control.
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
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October 31, 2011
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Previously Reported
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Adjustments
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As Restated
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ASSETS
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Cash
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$ | 11,928 | $ | 11,928 | ||||||||
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Total Current Assets
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11,928 | 11,928 | ||||||||||
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Mineral Property
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4,800,000 | (4,290,000 | ) | 510,000 | ||||||||
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Total Assets
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4,811,928 | (4,290,000 | ) | 521,928 | ||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
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Current Liabilities
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||||||||||||
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Accounts payable and accrued liabilities
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173,410 | 173,410 | ||||||||||
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Due to related parties
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25,100 | 25,100 | ||||||||||
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Notes payable
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165,416 | 165,416 | ||||||||||
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Total Liabilities
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363,926 | 363,926 | ||||||||||
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STOCKHOLDERS' EQITY (DEFICIT)
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Preferred Stock
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||||||||||||
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Authorized: 10,000,000 common shares with a par value of $0.001 per share Issued and outstanding; nil preferred shares
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- | - | ||||||||||
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Common Stock
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||||||||||||
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Authorized:250,000,000 common shares with a par value of $0.001 per share Issued and outstanding; $47,000,000 common shares
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47,000 | 47,000 | ||||||||||
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Additional-paid-in capital
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4,838,000 | 360,000 | 5,198,000 | |||||||||
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Accumulated deficit during the development stage
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(436,998 | ) | (4,650,000 | ) | (5,086,998 | ) | ||||||
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Total Stockholders' Equity (Deficit)
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4,448,002 | (4,290,000 | ) | 158,002 | ||||||||
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Total Liabilities and Stockholders' (Deficit)
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4,811,928 | (4,290,000 | ) | 521,928 | ||||||||
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
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Three Months Ended October 31, 2011
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Six Months Ended October 31, 2011
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Accumulated from April 29, 2010
(Date of Inception) to October 31, 2011
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||||||||||||||||||||||||||
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Previously Reported
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Adjustments
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As Restated
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Previously Reported
|
Adjustments
|
As Restated
|
Previously Reported
|
Adjustments
|
As Restated
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||||||||||||||||||||
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Revenues
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- | - | - | - | - | - | - | - | - | |||||||||||||||||||
|
Operating Expenses
|
||||||||||||||||||||||||||||
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Consulting fees
|
269,988 | - | 269,988 | 269,988 | - | 269,988 | 269,988 | - | 269,988 | |||||||||||||||||||
|
General and administrative
|
7,903 | - | 7,903 | 26,964 | - | 26,964 | 55,925 | - | 55,925 | |||||||||||||||||||
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Professional fees
|
12,750 | - | 12,750 | 27,750 | - | 27,750 | 99,850 | - | 99,850 | |||||||||||||||||||
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Total Operating Expenses
|
290,641 | - | 290,641 | 324,702 | - | 324,702 | 425,763 | - | 425,763 | |||||||||||||||||||
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Other Expense
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||||||||||||||||||||||||||||
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Interest Expense
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4,328 | - | 4,328 | 5,977 | - | 5,977 | 11,235 | - | 11,235 | |||||||||||||||||||
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Investment Impairment
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- | 4,650,000 | 4,650,000 | - | 4,650,000 | 4,650,000 | - | 4,650,000 | 4,650,000 | |||||||||||||||||||
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Net Loss
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(294,969 | ) | (4,650,000 | ) | (4,944,969 | ) | (330,679 | ) | (4,650,000 | ) | (4,980,679 | ) | (436,998 | ) | (4,650,000 | ) | (5,086,998 | ) | ||||||||||
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Net Loss per Share - Basic and Diluted
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(0.00 | ) | (0.07 | ) | (0.07 | ) | (0.00 | ) | (0.06 | ) | (0.06 | ) | ||||||||||||||||
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Weighted Average Shares Outstanding
- Basic and Diluted
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76,021,739 | - | 76,021,739 | 86,760,870 | - | 86,760,870 | ||||||||||||||||||||||
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
|
4. Acquisition of Discovery Gold Ghana Ltd.
|
On September 2, 2011, the Company entered into a share exchange agreement to acquire 100% of the issued and outstanding common shares of Discovery in exchange for $100,000 and issuance of 17,500,000 common shares of the Company and the impairment of the investment in Discovery Gold Ghana Limited resulted in an expense of $4,650,000.
The purchase price was allocated to the following assets and liabilities:
| $ | ||||
|
Purchase price
|
||||
|
Cash
|
100,000 | |||
|
17,500,000 common shares
|
4,550,000 | |||
| 4,650,000 | ||||
|
Fair value of Discovery net assets
|
||||
|
Impaired Investment
|
4,650,000 | |||
| 4,650,000 |
DISCOVERY GOLD CORPORATION
(F/K/A NORMAN CAY DEVELOPMENT, INC.)
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
(unaudited)
5. Note Payable
a) As at October 31, 2011, the Company owes $65,416 (April 30, 2011 - $65,416) of notes payable to a non-related party. The amounts owing are unsecured, due interest at 10% per annum, and due on demand. During the period ended October 31, 2011, the Company recorded interest expense of $3,268 (2010 - $2,014).
b) As at October 31, 2011, the Company owes $100,000 (April 30, 2011 - $nil) of notes payable to related party. The amounts owing are unsecured, due interest at 10% per annum, and due on demand. During the period ending October 31, 2011, the Company recorded interest expense of $1,836 (2010 - $nil).
6. Related Party Transactions
a) As at October 31, 2011, the Company owes $100 (April 30, 2011 - $100) to the President and CEO of the Company. The amount owing is unsecured, non-interest bearing, and due on demand.
b) As at October 31, 2011, the Company owes $25,000 (April 30, 2011 - $nil) to the President and Director of Discovery. The amount owing is unsecured, non-interest bearing, and due on demand.
7. Common Shares
All common shares issued for non-cash purposes have been valued using the end-of-day trading price of the Company’s common stock on the date of issuance.
a) On September 13, 2011, the Company issued 1,000,000 common shares to a non-related party for consulting services with a fair value of $260,000.
b) On September 15, 2011, the Company issued 17,500,000 common shares with respect to the acquisition of Discovery Gold Ghana Limited.
c) On September 20, 2011, the President and CEO of the Company returned 69,000,000 common shares to treasury and the shares were subsequently cancelled.
8. Subsequent Events
As of the date of this filing, there were no materially reportable events subsequent to October 31, 2011.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
|
|
October 31,
2011
$
|
April 30,
2011
$
|
||||||
|
Current Assets
|
11,928 | 71,160 | ||||||
|
Current Liabilities
|
363,926 | 102,479 | ||||||
|
Working Capital (Deficit)
|
(351,998 | ) | (31,319 | ) | ||||
Cash Flows
|
|
Six months ended October 31,
2011
$
|
Six months ended October 31,
2010
$
|
||||||
|
Cash Flows from (used in) Operating Activities
|
(59,232 | ) | (48,943 | ) | ||||
|
Cash Flows from (used in) Investing Activities
|
(125,000 | ) | - | |||||
|
Cash Flows from (used in) Financing Activities
|
125,000 | 55,488 | ||||||
|
Net Increase (decrease) in Cash During Period
|
(59.232 | ) | 6,545 | |||||
Operating Revenues
During the periods ended October 31, 2011 and 2010, the Company did not earn any operating revenues.
Operating Expenses and Net Loss
During the six months ended October 31, 2011, the Company incurred operating expenses of $324,702 compared with $58,648 for the six months ended October 31, 2010. The increase in operating expenses was attributed to consulting fees of $269,988 relating to the issuance of common shares for services. Overall, general and administrative expenses and professional fees were consistent to prior year.
For the six months ended October 31, 2011, the Company recorded a net loss of $4,980,679 compared with a net loss of $60,662 for the six months ended October 31, 2010. In addition to operating expenses, the Company incurred interest expense of $5,977 during the six months ended October 31, 2011 compared with $2,014 during the six months ended October 31, 2010 relating to interest on its note payable. The increase in interest expense was due to the fact that the current year accounted for the full term of the $65,416 note payable whereas the prior year only incorporated a partial term of the note, as well as interest expense on an additional $100,000 note payable in September 2011 that bears interest at 10% per annum.
Liquidity and Capital Resources
At October 31, 2011, the Company had cash of $11,928 and total assets of $521,928 compared with cash and total assets of $71,160 at April 30, 2011. The decrease in cash is attributed to the fact that the Company incurred operating expenses with minimal financing from debt sources and the increase in total assets was attributed to $510,000 acquisition cost of the Edum Banso property in August 2011.
At October 31, 2011, the Company had total liabilities of $363,926 compared with $102,479 at April 30, 2011. The increase in total liabilities was attributed to an additional $100,000 note payable issued in September 2011 that is unsecured, bears interest at 10% per annum, and is due on demand, and an increase of $136,447 in accounts payable and accrued liabilities which includes $125,000 owing with respect to the initial acquisition cost of the Edum Banso property.
The Company had a working capital deficit of $351,998 at October 31, 2011 compared with $31,319 at April 30, 2011. The increase in working capital deficit was attributed to expenditures incurred during the period for operating costs that were not replaced with financing, and also with respect to the issuance of a $100,000 note payable and $125,000 accounts payable relating to the original acquisition cost of the Edum Banso property as well as additional financing of $25,000 from related parties that were used as part of the acquisition cost.
Cashflow from Operating Activities
During the six months ended October 31, 2011, the Company used cash flows of $59,232 in operating activities compared with $48,943 of cash flows during the six months ended October 31, 2010. Overall, cash flows used for operating activities were consistent with prior year, and the slight increase is due to the availability of cash to settle outstanding obligations.
Cashflow from Financing Activities
During the six months ended October 31, 2011, the Company received $125,000 in proceeds from financing activities comprised of $100,000 from a note payable that is unsecured, bears interest at 10% per annum, and is due on demand and proceeds of $25,000 from a related party that is non-interest bearing. During the six months ended October 31, 2010, the Company received proceeds of $55,488 from the issuance of a 10% note payable.
Quarterly Developments
On September 2, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) by and among the Company, Discovery Gold Ghana Limited, a company organized under the laws of the country of Ghana (“DGG”), the stockholders of DGG (the “DGG Stockholders”), and the majority stockholder of the Company (the “Controlling Stockholder”). Pursuant to the Share Exchange Agreement, the Company shall acquire one hundred percent (100%) of the issued and outstanding ordinary shares of DGG, and in exchange the Company shall: (i) make a one-time payment of one hundred thousand dollars ( $100,000 ) to DGG and (ii) issue seventeen million five hundred thousand (17,500,000) newly-issued shares of restricted common stock of the Company to the DGG Stockholders as further set forth in the Share Exchange Agreement. As a result of the Share Exchange Agreement, the DGG Stockholders will hold approximately 15.22% of the issued and outstanding common stock of the Company. During the quarter the Company impaired the investment in Discovery Gold Ghana Limited resulting in an expense of $4,650,000.
On November 4, 2011, Dean Huge was appointed as the Chief Financial Officer and a member of the Board of Directors of the Company to serve until the next annual meeting of the shareholders and/or until his successor is duly appointed.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of October 31, 2011, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on August 10, 2011, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
1. Quarterly Issuances:
On September 2, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) by and among the Company, Discovery Gold Ghana Limited, a company organized under the laws of the country of Ghana (“DGG”), the stockholders of DGG (the “DGG Stockholders”), and the majority stockholder of the Company (the “Controlling Stockholder”). Pursuant to the Share Exchange Agreement, the Company shall acquire one hundred percent (100%) of the issued and outstanding ordinary shares of DGG, and in exchange the Company shall: (i) make a one-time payment of two hundred and fifty thousand dollars ($250,000) to DGG and (ii) issue seventeen million five hundred thousand (17,500,000) newly-issued shares of restricted common stock of the Company to the DGG Stockholders as further set forth in the Share Exchange Agreement. As a result of the Share Exchange Agreement, the DGG Stockholders will hold approximately 15.22% of the issued and outstanding common stock of the Company. A copy of the Share Exchange Agreement was filed with the SEC on September 7, 2011, as part of our Quarterly Report on Form 10-Q.
2. Subsequent Issuances:
Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. [REMOVED AND RESERVED].
ITEM 5. OTHER INFORMATION.
On September 20, 2011, the Company requested and instructed their transfer agent to cancel sixty nine million (69,000,000) shares of the Company’s common stock (the “Shares”), which were previously issued and outstanding and held by the Company’s sole officer and director, Ms. Shelley Guidarelli. The Company’s transfer agent cancelled and returned the Shares back to the treasury of the Company. Accordingly, the Shares shall now be available for issuance by the Company.
ITEM 6. EXHIBITS
|
Exhibit
Number
|
Description of Exhibit
|
Filing
|
|
3.01
|
Articles of Incorporation
|
Filed with the SEC on June 3, 2010 as part of our Registration Statement on Form S-1.
|
|
3.02
|
Bylaws
|
Filed with the SEC on June 3, 2010 as part of our Registration Statement on Form S-1.
|
|
10.01
|
Management Agreement between the Company and Shelley Guidarelli dated April 30, 2011
|
Filed with the SEC on June 3, 2010 as part of our Registration Statement on Form S-1.
|
|
10.02
|
Promissory Note between the Company and Steve Ross dated May 10, 2010
|
Filed with the SEC on August 10, 2010 as part of our Amended Registration Statement on Form S-1/A.
|
|
10.03
|
Amended Promissory Note between the Company and Steve Ross dated October 19, 2010
|
Filed with the SEC on October 21, 2010 as part of our Amended Registration Statement on Form S-1/A.
|
|
10.04
|
Consulting Agreement between the Company and Voltaire Gomez dated September 24, 2010
|
Filed with the SEC on December 17, 2010 as part of our Quarterly Report on Form 10-Q.
|
|
10.05
|
Investor Relations Agreement between the Company and LiveCall Investor Relations Company dated May 15, 2011
|
Filed with the SEC on August 10, 2011 as part of our Annual Report on Form 10-K.
|
|
10.06
|
Consulting Agreement between the Company and Kevin Coombes dated September 1, 2011
|
Filed with the SEC on September 14, 2011 as part of our Quarterly Report on Form 10-Q.
|
|
10.07
|
Share Exchange Agreement with Discovery Gold Ghana Limited dated September 2, 2011
|
Filed with the SEC on September 7, 2011 as part of our Current Report on Form 8-K.
|
|
10.08
|
Convertible Promissory Note between the Company and Donald Ross dated September 14, 2011
|
Filed with the SEC on September 14, 2011 as part of our Quarterly Report on Form 10-Q.
|
|
21.01
|
List of Subsidiaries
|
Filed with the SEC on October 17, 2011 as part of our Current Report on Form 8-K.
|
|
31.01
|
Filed herewith.
|
|
|
31.02
|
Filed herewith.
|
|
|
32.01
|
Furnished herewith.
|
|
|
32.02
|
Furnished herewith.
|
|
|
101.INS*
|
XBRL Instance Document
|
Filed herewith.
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
Filed herewith.
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith.
|
|
101.LAB*
|
XBRL Taxonomy Extension Labels Linkbase Document
|
Filed herewith.
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith.
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith.
|
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
[SIGNATURE PAGE TO FOLLOW]
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|||
|
|
DISCOVERY GOLD CORPORATION
|
||
|
|
|||
|
Dated: July 24, 2012
|
/s/ Stephen E. Flechner
|
||
|
|
|
By: Stephen E. Flechner
|
|
|
|
|
Its: Chief Executive Officer
|
|
|
|
|
||
|
|
|||
|
|
DISCOVERY GOLD CORPORATION
|
||
|
|
|||
|
Dated: July 24, 2012
|
/s/ Dean Huge
|
||
|
|
|
By: Dean Huge
|
|
|
|
|
Its: Chief Financial Officer
|
|
|
|
|
||