Attached files
file | filename |
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EX-32.1 - EXHIBIT 32.1 - Liberty Gold Corp. | ex32_1apg.htm |
EX-31.1 - EXHIBIT 31.1 - Liberty Gold Corp. | ex31_1apg.htm |
EXCEL - IDEA: XBRL DOCUMENT - Liberty Gold Corp. | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ____
Commission File No. 333-16135
LIBERTY GOLD CORP.
(Exact name of registrant as specified in its charter)
Delaware |
80-0372385 |
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification No.) |
2415 East Camelback Road, Suite 700, Phoenix, AZ 85016
(Address of principal executive offices, zip code)
602-553-1190
(Registrants telephone number, including area code)
___________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the issuer (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 [ ]
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 [ ]
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 [X] |
(Do not check if a smaller reporting company) |
|
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act): Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 23, 2013 there were 88,416,287 shares of common stock, $0.0001 par value per share, outstanding.
LIBERTY GOLD CORP.
(An Exploration State Company)
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2013
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Liberty Gold Corp., a Delaware corporation (the Company), contains forward-looking statements, as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as may, will, should, could, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the Companys need for and ability to obtain additional financing and that there will be little demand for the Companys services and products, and other factors over which we have little or no control; and other factors discussed in the Companys filings with the Securities and Exchange Commission (SEC).
Our management has included projections and estimates in this Form 10-Q, which are based primarily on managements experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS.
Liberty Gold Corp.
(An Exploration State Company)
June 30, 2013 and 2012
Index to the Condensed Financial Statements
Contents Page(s)
Condensed Balance Sheets at June 30,2013 (Unaudited) and March 31, 2013 (Audited)..............................................................................F-2 Condensed Statements of Operations for the Three Months Ended June 30,2013 and 2012 and for the Period from April 5, 2011 (Date of Entry into Exploration) through June 30,2013 (Unaudited)...........................................................................................F-3 Condensed Statement of Stockholders Equity (Deficit) for the Period from March 31, 2011 through June 30,2013 (Unaudited).............................................................................................................................................................................................................F-4 Condensed Statements of Cash Flows for the Three Months Ended June 30,2013 and 2012 and for the Period from April 5, 2011 (Date of Entry into Exploration) through June 30,2013 (Unaudited)...........................................................................................F-6 Notes to the Condensed Financial Statements (Unaudited)...............................................................................................................................F-7 |
F-1
Liberty Gold Corp. | ||||||||
(Formerly IBOS, Inc.) | ||||||||
(An Exploration State Company) | ||||||||
Condensed Balance Sheets | ||||||||
|
|
|
|
(unaudited) |
|
|
(audited) | |
|
|
|
|
June 30,2013 |
|
|
March 31,2013 | |
ASSETS |
|
|
|
|
| |||
CURRENT ASSETS: |
|
|
|
|
| |||
|
Cash |
$ |
3 |
|
$ |
3,091 | ||
|
Prepaid expenses |
|
3,663 |
|
|
6,138 | ||
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
3,666 |
|
|
9,229 | |
|
|
|
|
|
|
|
|
|
MINERAL PROPERTIES: |
|
|
|
|
| |||
|
Mineral properties |
|
1,369,072 |
|
|
1,369,072 | ||
|
|
|
|
|
|
| ||
WEBSITE |
|
27,765 |
|
|
26,728 | |||
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
$ |
1,400,503 |
|
$ |
1,405,029 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY (DEFICIT) |
|
|
|
|
| |||
CURRENT LIABILITIES: |
|
|
|
|
| |||
|
Accounts Payable |
$ |
25,830 |
|
$ |
22,175 | ||
|
Accrued expenses |
|
26,000 |
|
|
4,500 | ||
|
Advances from stockholders |
|
28,356 |
|
|
28,356 | ||
|
Current portion of mineral property payable |
$ |
583,302 |
|
$ |
621,876 | ||
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
663,488 |
|
|
676,907 | |
|
|
|
|
|
|
|
|
|
MINERAL PROPERTIES PAYABLE, net of current portion |
|
30,000 |
|
|
30,000 | |||
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
693,488 |
|
|
706,907 |
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES (Note 9) |
|
- |
|
|
- | |||
|
|
|
|
|
|
|
|
|
LIBERTY GOLD CORP. STOCKHOLDERS' (DEFICIT): |
|
|
|
|
| |||
|
Preferred stock at $0.0001 par value: 5,000,000 shares authorized; |
|
|
|
|
| ||
|
|
none issued or outstanding |
|
- |
|
|
- | |
|
Common stock at $0.0001 par value: 250,000,000 shares authorized, |
|
|
|
|
| ||
|
|
88,416,287 and 88,416,287 shares issued and outstanding, respectively |
8,841 |
|
|
8,841 | ||
|
Stock payable |
|
90,000 |
|
|
21,300 | ||
|
Additional paid-in capital |
|
2,094,640 |
|
|
2,094,640 | ||
|
Accumulated deficit |
|
(88,952) |
|
|
(88,952) | ||
|
Deficit accumulated during the exploration state |
|
(1,397,514) |
|
|
(1,337,707) | ||
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' (Deficit) |
|
707,015 |
|
|
698,122 | |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and (Deficit) |
$ |
1,400,503 |
|
$ |
1,405,029 |
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed unaudited financial statements |
F-2
Liberty Gold Corp. (An Exploration State Company) Condensed Statements of Operations (unaudited) | |||||||||||||||
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
April 5, 2011 (Exploration) through | ||||||
|
|
|
|
|
June 30,2013 |
|
June 30,2012 |
|
June 30,2013 | ||||||
|
|
|
|
|
|
|
|
| |||||||
Revenues earned during the exploration state |
$ |
- |
|
$ |
- |
|
$ |
- | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cost of revenues: |
|
|
|
|
|
|
|
|
| ||||||
|
Exploration costs |
|
|
- |
|
|
186,300 |
|
|
605,190 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
Total cost of revenues |
|
|
- |
|
|
186,300 |
|
|
605,190 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Operating expenses |
|
|
|
|
|
|
|
|
| ||||||
|
Officers' compensation |
|
|
19,500 |
|
|
19,500 |
|
|
156,865 | |||||
|
Professional fees |
|
|
33,904 |
|
|
75,673 |
|
|
516,571 | |||||
|
General and administrative expenses |
|
|
6,193 |
|
|
6,896 |
|
|
106,310 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
Total operating expenses |
|
|
59,597 |
|
|
102,069 |
|
|
779,746 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
LOSS FROM OPERATIONS |
(59,597) |
|
|
(288,369) |
|
|
(1,384,936) | ||||||||
|
|
|
|
|
|
|
| ||||||||
OTHER EXPENSE |
|
|
|
|
|
|
| ||||||||
Loss on currency exchange |
(210) |
|
|
- |
|
|
(4,511) | ||||||||
|
|
|
|
|
|
|
| ||||||||
Loss from continuing operations before income taxes |
(59,807) |
|
|
(288,369) |
|
|
(1,389,447) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Income tax provision |
|
|
- |
|
|
- |
|
|
- | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net loss from continuing operations |
|
|
(59,807) |
|
|
(288,369) |
|
|
(1,389,447) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Discontinued operations |
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
| |||||||
|
|
Loss from discontinued operations, net of taxes |
- |
|
|
- |
|
|
(8,067) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Loss |
|
|
|
$ |
(59,807) |
|
$ |
(288,369) |
|
$ |
(1,397,514) | ||||
Net loss per common share |
|
|
|
|
|
|
|
|
| ||||||
|
- basic and diluted |
|
|
|
|
|
|
|
|
| |||||
|
|
|
Total net loss per common share |
$ |
(0.00) |
|
$ |
(0.00) |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Weighted average common shares outstanding |
|
|
| |||||||||||
|
|
- basic and diluted |
|
88,416,287 |
|
|
88,617,484 |
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
See accompanying notes to the condensed unaudited financial statements |
F-3
Liberty Gold Corp. (An Exploration State Company) Condensed Statements of Stockholders Equity
| |||||||||||||||
|
|
|
Common Stock, $0.0001 Par Value |
|
|
|
|
|
|
| |||||
|
|
|
Number of Shares |
Amount |
|
Stock Payable |
Additional Paid-in Capital |
Accumulated Deficit |
Deficit Accumulated during the Exploration Stage |
|
Total Liberty Gold Corp Shareholders' Equity (Deficit) | ||||
Balance, March 31, 2011 |
124,100,000 |
$ |
12,410 |
$ |
- |
$ |
45,998 |
$ |
(80,885) |
$ |
- |
$ |
(22,477) | ||
|
Common shares issued for mineral property acquisition in Alaska |
500,000 |
|
50 |
|
|
|
- |
|
|
|
|
|
50 | |
|
Forgiveness of debt by former stockholders |
|
|
|
|
|
|
30,545 |
|
- |
|
- |
|
30,545 | |
|
Equity units inclusive one common share and one warrant issued for cash at $0.80 per unit on June 28, 2011 |
75,000 |
|
8 |
|
|
|
59,992 |
|
- |
|
- |
|
60,000 | |
|
Common shares issued for mineral property acquisition in Arizona |
500,000 |
|
50 |
|
|
|
- |
|
- |
|
- |
|
50 | |
|
Common shares issued for mineral property acquisition in Mexico |
1,500,000 |
|
150 |
|
|
|
- |
|
- |
|
- |
|
150 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.80 per unit between July 28, 2011 and September 9, 2011 |
712,500 |
|
71 |
|
|
|
569,929 |
|
- |
|
- |
|
570,000 | |
|
Surrender of 40,000,000 common shares at $0.0001 par value on August 10, 2011 |
(40,000,000) |
|
(4,000) |
|
|
|
4,000 |
|
- |
|
- |
|
- | |
|
Common shares issued for mineral property acquisition in Alaska |
500,000 |
|
50 |
|
|
|
- |
|
- |
|
- |
|
| |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit between October 28, 2011 and November 12, 2011 |
666,666 |
|
67 |
|
|
|
299,933 |
|
- |
|
- |
|
300,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.99 per unit on December 15, 2011 |
101,010 |
|
10 |
|
|
|
99,990 |
|
- |
|
- |
|
100,000 | |
|
Cancellation of common shares issued for property acquisitions in Mexico |
(1,500,000) |
|
(150) |
|
|
|
- |
|
- |
|
- |
|
(150) | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit between February 7, 2012 and February 8, 2012 |
555,556 |
|
55 |
|
|
|
249,945 |
|
- |
|
- |
|
250,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit March 21, 2012 |
111,111 |
|
11 |
|
|
|
49,989 |
|
- |
|
- |
|
50,000 | |
|
Common shares issued for mineral property acquisition in Alaska |
500,000 |
|
50 |
|
|
|
- |
|
- |
|
- |
|
50 | |
|
Shares issued for advisory board services |
50,000 |
|
5 |
|
|
|
22,495 |
|
|
|
|
|
22,500 | |
|
Net loss |
|
|
|
|
|
|
|
|
(8,067) |
|
(701,410) |
|
(709,477) | |
Balance, March 31, 2012 |
88,371,843 |
|
8,837 |
|
|
|
1,432,816 |
|
(88,952) |
|
(701,410) |
|
651,291 | ||
|
Cancellation of common shares issued for property acquisitions in Alaska |
(1,500,000) |
|
-150 |
|
|
|
- |
|
- |
|
- |
|
(150) | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit April 23, 201 |
222,222 |
|
22 |
|
|
|
99,978 |
|
- |
|
- |
|
100,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit May 18, 2012 |
166,667 |
|
17 |
|
|
|
74,983 |
|
- |
|
- |
|
75,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit June 5, 2012 |
222,222 |
|
22 |
|
|
|
99,978 |
|
- |
|
- |
|
100,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit June 11, 2012 |
222,222 |
|
22 |
|
|
|
99,978 |
|
- |
|
- |
|
100,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit June 25, 2012 |
111,111 |
|
11 |
|
|
|
49,989 |
|
- |
|
- |
|
50,000 | |
(continued on next page)
|
F-4
(continued from previous page)
| |||||||||||||||
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit August 1, 2012 |
166,667 |
|
17 |
|
|
|
74,983 |
|
- |
|
- |
|
75,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit September 26, 2012 |
111,111 |
|
11 |
|
|
|
49,989 |
|
- |
|
- |
|
50,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit November 14, 2012 |
166,667 |
|
17 |
|
|
|
74,983 |
|
- |
|
- |
|
75,000 | |
|
Equity units inclusive of one common share and one warrant issued for cash at $0.45 per unit November 15, 2012 |
55,555 |
|
5 |
|
|
|
24,995 |
|
- |
|
- |
|
25,000 | |
|
Shares issued for services |
350,000 |
|
35 |
|
|
|
,111,973 |
|
- |
|
- |
|
111,978 | |
|
Repurchase of shares, June 18, 2012 |
(250,000) |
|
(25) |
|
|
|
(99,975) |
|
|
|
|
|
(100,000) | |
|
Stock Payable |
|
|
|
|
21,300 |
|
|
|
|
|
|
|
21,300 | |
|
Net Loss |
- |
|
- |
|
- |
|
- |
|
- |
|
(636,297) |
|
(636,297) | |
Balance, March 31, 2013 |
88,416,287 |
|
8,841 |
|
21,300 |
|
2,094,640 |
|
(88,952) |
|
(1,337,707) |
|
698,122 | ||
|
Stock Payable |
|
|
|
|
68,700 |
|
|
|
|
|
|
|
68,700 | |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
(59,807) |
|
(59,807) | |
Balance June 30, 2013 (Unaudited) |
88,416,287 |
$ |
8,841 |
$ |
90,000 |
$ |
2,094,640 |
$ |
(88,952) |
$ |
(1,397,514) |
$ |
707,015 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed unaudited financial statements |
F-5
F-6
Liberty Gold Corp.
(An Exploration State Company)
June 30, 2013 and 2012
Notes to the Condensed Unaudited Financial Statements
Note 1 Organization and Operations
IBOS, Inc.
IBOS, Inc. (IBOS) was incorporated as a Subchapter S corporation on April 11, 2006 under the laws of the State of California. It was converted into a C corporation, incorporated in the State of Delaware on March 5, 2009, in a transaction in which the newly-formed corporation issued an aggregate of 9,000,000 shares of common stock to the former stockholders of the S corporation for all of the issued and outstanding shares of IBOS. All shares were held by and all shares of common stock were issued to IBOSs stockholders and President and Chief Executive Officer, Chief Technology Officer and Chief Financial Officer. No cash consideration was paid. No value was given to the shares issued by the newly formed corporation. Therefore, the shares were recorded to reflect the $.0001 par value and additional paid-in capital was recorded as a negative amount ($900).
IBOS applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (SAB) (SAB Topic 4B) issued by the United States Securities and Exchange Commission (the SEC)), by reclassifying all of IBOSs undistributed earnings and losses to additional paid-in capital as of March 5, 2009.
The accompanying financial statements have been prepared as if IBOS had its corporate capital structure as of the first date of the first period presented.
IBOS provided web-based comprehensive selection of electronic medical claims processing and collection solutions to the healthcare provider industry prior to April 5, 2011. IBOS had minimal operations between April 1, 2011 and April 4, 2011.
Change in Control and Scope of Business
On April 5, 2011, a Stock Purchase Agreement (the SPA) by and among IBOSs three officers and directors Deepak Danavar, Ravi Sharma, and James Villalobos, the Company and Lynn Harrison (LH) was executed and a closing was held under the SPA. Pursuant to the SPA (i) LH purchased an aggregate of 8,280,000 shares of common stock of the Company (87% of the outstanding shares) from Messrs. Danavar, Sharma and Villalobos for an aggregate purchase price of $370,000.00; (ii) the Company disposed of its California subsidiary by transferring its shares to Messrs. Danavar, Sharma and Villalobos; (iii) LH was elected the sole director of the Company; (iv) LH was elected President and CEO of the Company and Frank J. Hariton was elected secretary of the Company; and (v) Messrs Danavar, Sharma and Villalobos each resigned as officers and directors of the Company. Additionally as part of the change in control the former shareholders agreed to forgive debts outstanding to them totaling $30,544 which have been recorded as contributed capital. As part of the Stock Purchase transaction the Company transferred to a newly-formed company controlled by IBOSs three officers and directors Deepak Danavar, Ravi Sharma, and James Villalobos, the Companys three former officers and directors (the Buyers), certain operating assets associated with the operations of IBOSs electronic medical claims processing and collection solutions, subject to related liabilities (the Business). Pursuant to the terms of SPA, the assumption by the Buyer of all liabilities and debts of IBOS which relate to or arise out of the operations of the Business and the indemnification by the Buyer of all losses, liabilities, claims, damages, costs and expenses that may be suffered by IBOS at any time which arise out of the operations of the Business. Loss from disposal of the discontinued operations amounted to $8,067.
Upon acquisition of certain gold mine properties on April 5, 2011 IBOS decided to engage in the business of acquiring, exploring and developing mineral properties.
Surrender of Common Shares from Principal Stockholder upon Change in Control
On April 21, 2011, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 351,900,000 shares of common stock owned by her, thus reducing her ownership from 414,000,000 shares to 62,100,000 shares and reducing the Companys issued and outstanding common shares from 476,000,000 shares to 124,100,000 shares.
All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the surrender of those common shares.
F-7
Amendment to the Certificate of Incorporation
On April 26, 2011, IBOS filed a Certificate of Amendment of Certificate of Incorporation, and (i) changed its name to Liberty Gold Corp. (Liberty Gold or the Company) upon the acquisition of certain gold mine properties; (ii) increased its total number of shares of all classes of stock which the Company is authorized to issue from One Hundred and Five Million (105,000,000) shares, inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and One Hundred Million (100,000,000) shares of Common Stock, par value $.0001 per share, to Two Hundred Fifty Five Million (255,000,000) shares, inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and Two Hundred Fifty Million (250,000,000) shares of Common Stock, par value $.0001 per share; and (iii) affected a 50-for-1 (1:50) forward stock split (the Stock Split).
All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the Stock Split.
The Company elected March 31 as its fiscal year ending date.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation Unaudited Interim Financial Information
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended March 31, 2013 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the SEC).
The results of operations for the three month period ended June 30 2013 are not necessarily indicative of the results for the full fiscal year ending March 31, 2014.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.
Exploration State Company
The Company is a development stage company as defined by ASC 915, Development Stage Entities. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.
An exploration-state company is an issuer that is engaged in the search for mineral deposits (reserves) and is neither in the development nor production stage.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents were $3, and $3,091 at June 30, 2013 and March 31, 2013 respectively.
Cash Flows Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses
F-8
the indirect or reconciliation method (Indirect method) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies at June 30, 2013 and March 31, 2013.
Financial Instruments
The Companys balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entitys own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 |
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Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
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Level 2 |
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Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
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Level 3 |
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Pricing inputs that are generally observable inputs and not corroborated by market data. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
Long-lived Assets
The Company follows ASC 360 for its long-lived assets. The Companys long-lived assets, which include mineral properties, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the assets expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Companys overall strategy with respect to the manner or use of the acquired assets or
F-9
changes in the Companys overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
Management periodically reviews the recoverability of the capitalized mineral properties and mining equipment. Management takes into consideration various information including, but not limited to, historical production records taken from previous mine operations, results of exploration activities conducted to date, estimated future prices and reports and opinions of outside consultants. A provision is made for any expected loss on the project or property when it is determined that a project or property will be abandoned or its carrying value has been impaired..
The impairment charges, if any, is included in operating expenses in the accompanying statements of operations.
Mineral Properties
The Company follows ASC 930, Extractive Activities for its mineral properties. for its mineral properties. Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves. If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production. Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value. General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.
The provision for depreciation, depletion and amortization (DD&A) of mineral properties is calculated on a property-by-property basis using the unit-of-production method. Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all general exploration costs, if any, are being expended.
Related Parties
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related party transactions for the periods ending June 30, 2013 and March 31, 2013 totaled $28,356 and were comprised of advances payable.
Share-based Expense
ASC 718, Compensation Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
F-10
Share-based expense for the three months ended June 30, 2013 and 2012 was $0.
Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized at June 30, 2013 or March 31, 2013.
Earnings (Loss) Per Share
Basic loss per share is computed in accordance with ASC Topic 260, Earnings per Share, by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation.
At June 30, 2013 and 2012, the Company had potentially dilutive common shares in the form of warrants.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC 830Foreign Currency Translation, foreign denominated monetary assets and liabilities are translated into United States dollars at rates of exchange in effect at the balance sheet date. Non-monetary items, including equity, are translated at the historical rate of exchange. Revenues and expenses are translated at the average rates of exchange during the year.
Recently Issued Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification (ASC) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.
We have reviewed the FASB issued Accounting Standards Update (ASU) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporations reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
Note 3 Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company had a deficit accumulated during the exploration state at June 30, 2013 of $1,397,514, a net loss of $59,807, net cash used in operating activities, of $70,751, and a $ 659,825 working capital deficiency. These factors raise substantial doubt about the Companys ability to continue as a going concern.
While the Company is attempting to commence explorations and generate sufficient revenues, the Companys cash position may not be sufficient enough to support the Companys daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to commence explorations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues.
F-11
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 Website
Website and accumulated amortization are as follows:
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June 30, |
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2013 |
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2012 |
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Fixed assets: |
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Website costs |
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$ |
27,765 |
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$ |
- |
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Less: Accumulated amortization |
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- |
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- |
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Total website |
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$ |
27,765 |
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$ |
- |
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Amortization expense is computed using the straight-line method over seven years. Amortization for the quarter ended June 30, 2013 was $0 as the website is still in the application and infrastructure development stage. Amortization expense for the periods ended June 30, 2013 and 2012 was $0 and $0, respectively.
Note 5 Mineral Properties
The carrying amount of each mineral property and the respective mineral property payable balances are presented below as of June 30, 2013:
There were no exploration costs capitalized or expended during the period ended June 30, 2013 for any of the mineral properties.
Note 6 Related Party Transactions
Advances from Stockholders and Former Stockholders
From time to time, stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
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June 30, 2013 |
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March 31, 2013 |
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Advances from major stockholder and officer |
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$ |
28,356 |
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$ |
28,356 |
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$ |
28,356 |
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$ |
28,356 |
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F-12
Note 7 Stockholders (Deficit)
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred and Five Million (105,000,000) shares of which Five Million (5,000,000) shares shall be Preferred Stock, par value $.0001 per share, and One Hundred Million (100,000,000) shares shall be Common Stock, par value $.0001 per share.
On April 28, 2011, the Company filed a Certificate of Amendment of Certificate of Incorporation, and increased its total number of shares of all classes of stock which the Company is authorized to issue to Two Hundred Fifty Five Million (255,000,000) shares inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and Two Hundred Fifty Million (250,000,000) shares of Common Stock, par value $.0001 per share.
Common Stock
On April 21, 2011, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 351,900,000 shares of common stock owned by her, thus reducing her ownership from 414,000,000 shares to 62,100,000 shares and reducing the Companys issued and outstanding common shares from 476,000,000 shares to 124,100,000 shares. This transaction was given retroactive effect to the opening numbers at March 31, 2010.
On June 28, 2011, the Company issued to an individual 75,000 Units (each unit being comprised of one share of the Companys common stock and a warrant exercisable over a three year period for 75,000 shares of common stock exercisable at $1.25 per share). The Units were sold at $.80 per Unit for an aggregate of $60,000.
For the period from July 28, 2011 through September 9, 2011, the Company issued to a foreign institutional investor a total of 712,500 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $1.25 per share expiring three (3) years from the date of issuance. The Units were sold at $.80 per Unit for an aggregate of $570,000.
On August 10, 2011, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 40,000,000 shares of common stock.
On June 18, 2012, the Company entered into an agreement to repurchase 250,000 of its shares from an unaffiliated party for
$0.40 per share for a total of $100,000. These shares were subsequently retired.
On June 26, 2012, under the Termination Agreement of the Alaska mineral property purchase agreement, the Contra Party is returning to the Registrant the 1,500,000 shares that were issued to it and the Registrant is relieved from all further obligations under the PPA
During the period ended December 31, 2012, the Company issued 275,000 shares of common stock for services valued at $107,125.
Stock Payable
During the three months ended June 2013, the company recorded $ 68,700 in common stock payable for future issuance of 152,667 common shares for $68,700 in cash. As of March 31, 2013, the Company recorded $21,300 in common stock payable for future issuance of 47.333 common shares for $21,300 in cash. As of this filing, the shares have not been issued. The share stock payable relates to and is in accordance with our equity financing agreement with American Gold Holdings, Ltd. (AGH).
Equity Financing Agreement
On October 11, 2011, the Company executed a Share Issuance Agreement with American Gold Holdings, Ltd. (AGH) that allows the Company to issue its equity in Units with each unit comprised of one share of common stock and a warrant to purchase one share of common stock. The issue price of the Unit will be the greater of $0.45 or 90% of the volume weighted average of the closing price of common stock, for the five (5) banking days immediately preceding the date of the notice, as quoted on OTC markets, or other source of stock quotes as agreed to by both parties. The exercise price of the Warrants will be 130% of the price of the Unit and the term of the Warrants will be three (3) years from the date of issuance.
F-13
The Share Issuance Agreement commits AGH to make advances to the Company up to $ 15,000,000 in tranches of no more than $1,000,000 each and in multiples of $25,000 until October 11, 2013 (the completion date) or to be extended for an additional term of up to twelve (12) months at the option of the Company or AGH upon written notice on or before the completion date.
On October 28, 2011 and November 12, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000 and $200,000, respectively. The Company issued 222,222 and 444,444 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On December 15, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000. The Company issued 101,010 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advance.
On February 7, 2012 and February 8, 2012, the Company issued Advance Notices to and received the funds from AGH of $25,000 and $225,000, respectively. The Company issued 55,556 and 500,000 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On March 21, 2012, the Company issued Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On April 23, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On May 18, 2012, the Company issued Advance Notices to and received the funds from AGH of $75,000. The Company issued 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On June 5, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On June 11, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at
$0.45 per Unit for the advances.
On June 25, 2012, the Company issued Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On August 1, 2012, the Company issued Advance Notices to and received the funds from AGH of $75,000. The Company issued 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On September 26, 2012, the Company issued Advance Notices to AGH for $50,000 which has been included in Stock Subscriptions Receivable. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
F-14
On November 14 and 15, 2012, the Company issued Advance Notices to AGH for $75,000 and $25,000, respectively, which has been included in Stock Subscriptions Receivable. The Company issued a total of 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
Warrants Issued in Connection with Sale of Common Shares
Description of Warrants
(i) Warrants Issued in June 28, 2011
In connection with the sale of 75,000 shares of its common stock at $0.80 per share or $60,000 in gross proceeds to one investor on June 28, 2011, the Company issued a warrant to purchase 75,000 shares of its common stock exercisable at $1.25 per share earned and exercisable upon issuance expiring three (3) year from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
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Expected volatility (*) |
55.91 |
% |
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Risk-free interest rate |
0.75 |
% |
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Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $60,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $48,000 and $12,000, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(ii) Warrants Issued for the period from July 28, 2011 through September 9, 2011
For the period from July 28, 2011 through September 9, 2011, in connection with the sale of 712,500 shares of its common stock at $0.80 per share or $570,000 in gross proceeds to the investors, the Company issued warrants to purchase 712,500 shares of its common stock exercisable at $1.25 per share earned and exercisable upon issuance expiring three (3) years from the date of issuance.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
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Expected volatility (*) |
49.48 |
% |
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Risk-free interest rate |
0.33 |
% |
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Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
F-15
The Company allocated the gross proceeds of $570,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $475,000 and $95,000, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(iii) Warrants Issued for the period from October 28, 2011 through November 12, 2011
For the period from October 28, 2011 through November 12, 2011, the Company sold 666,666 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
49.48 |
% |
|
|
|
Risk-free interest rate |
0.37 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $300,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $241,071 and $58,929, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(iv) Warrants Issued on December 15, 2011
On December 15, 2011, the Company sold 101,010 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
43.21 |
% |
|
|
|
Risk-free interest rate |
0.37 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $100,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $82,500 and $17,500, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
F-16
(v) Warrants Issued on February 7 and February 8, 2012
On December 15, 2011, the Company sold 555,556 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
41.56 |
% |
|
|
|
Risk-free interest rate |
0.35 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $250,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $208,334 and $ 41,666 , respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(vi) Warrants Issued on March 21, 2012
On March 21, 2011, the Company sold 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
|
3.00 |
|
|
|
|
|
Expected volatility (*) |
|
41.12 |
% |
|
|
|
|
Risk-free interest rate |
|
0.58 |
% |
|
|
|
|
Dividend yield |
|
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $50,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $41,667 and $8,333, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(vii) Warrants Issued on April 23, 2012
On April 23, 2012, the Company sold 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three
F-17
(3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
|
3.00 |
|
|
|
|
|
Expected volatility (*) |
|
36.46 |
% |
|
|
|
|
Risk-free interest rate |
|
0.39 |
% |
|
|
|
|
Dividend yield |
|
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $100,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $63,698 and $36,302, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(viii) Warrants Issued on May 18, 2012
On May 18, 2012, the Company sold 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
31.17 |
% |
|
|
|
Risk-free interest rate |
0.42 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $75,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $46,920 and $28,080, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(viiii) Warrants Issued on June 5, 2012
On June 5, 2012, the Company sold 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
F-18
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
35.90 |
% |
|
|
|
Risk-free interest rate |
0.34 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $100,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $65,804 and $34,196, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(x) Warrants Issued on June 11, 2012
On June 11, 2012, the Company sold 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
35.92 |
% |
|
|
|
Risk-free interest rate |
0.37 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $100,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $65,530 and $35,470, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(xi) Warrants Issued on June 25, 2012
On June 25, 2012, the Company sold 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
F-19
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
35.57 |
% |
|
|
|
Risk-free interest rate |
0.39 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $50,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $31,884 and $18,116, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(xii) Warrants Issued on August 1, 2012
On August 1, 2012, the Company sold 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
35.26 |
% |
|
|
|
Risk-free interest rate |
0.32 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $75,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $57,811 and $17,189, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(xiii) Warrants Issued on September 26, 2012
On September 26, 2012, the Company sold 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
F-20
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
34.60 |
% |
|
|
|
Risk-free interest rate |
0.34 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $50,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $33,832 and $16,168, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(xvi) Warrants Issued on November 14, 2012
On November 14, 2012, the Company sold 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
34.04 |
% |
|
|
|
Risk-free interest rate |
0.33 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $75,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $54,178 and $20,822, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.
(xv) Warrants Issued on November 15, 2012
On November 15, 2012, the Company sold 55,555 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:
F-21
Expected life (year) |
3.00 |
|
|
|
|
Expected volatility (*) |
34.09 |
% |
|
|
|
Risk-free interest rate |
0.32 |
% |
|
|
|
Dividend yield |
0.00 |
% |
* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility. The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business. The Company calculated five (5) comparable public traded goldmine companies historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies historical volatility as its expected volatility.
The Company allocated the gross proceeds of $25,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $18,989 and $6,011, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions
Exercise of Warrants
For the period ended June 30, 2013, none of the warrants have been exercised.
Summary of Warrant Activities
The table below summarizes the Companys non-derivative warrant activities through June 30, 2013:
|
|
Number of Warrant Shares |
|
Exercise Price Range Per Share |
|
Weighted Average Exercise Price |
|
Fair Value at Date of Issuance |
|
Aggregate Intrinsic Value |
| |||||||||||||
Balance, March 31, 2012 |
|
|
2,221,843 |
|
|
|
$ |
0.59-1.29 |
|
|
|
$ |
0.86 |
|
|
$ |
281,042 |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
1,444,444 |
|
|
|
$ |
0.59 |
|
|
|
$ |
0.59 |
|
|
$ |
212,127 |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canceled for cashless exercise |
|
|
(- |
) |
|
|
|
-- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised (Cashless) |
|
|
(- |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(- |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2013 |
|
|
3,666,287 |
|
|
|
$ |
0.59-1.29 |
|
|
|
$ |
0.76 |
|
|
$ |
493,169 |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned and exercisable, June 30, 2013 |
|
|
3,666,287 |
|
|
|
$ |
0.59-1.29 |
|
|
|
$ |
0.76 |
|
|
$ |
493,169 |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested, June 30, 2013 |
|
|
- |
|
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
The following table summarizes information concerning outstanding and exercisable warrants as of June 30, 2013:
F-22
|
|
Warrants Outstanding |
|
Warrants Exercisable |
| ||||||||||||||
Range of Exercise Prices |
|
Number Outstanding |
|
Average Remaining Contractual Life (in years) |
|
Weighted Average Exercise Price |
|
Number Exercisable |
|
Average Remaining Contractual Life (in years) |
|
Weighted Average Exercise Price |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.59 - 1.29 |
|
|
3,666,287 |
|
|
1.62 |
|
$ |
0.75 |
|
|
3,666,287 |
|
|
1.62 |
|
$ |
0.75 |
|
Note 8 Income Tax Provision
At June 30, 2013, the Company has available for federal income tax purposes net operating loss (NOL) carry-forwards of $1,486,466.The NOLs begin expiring in 2031. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements since the Company believes that the realization of its net deferred tax asset of approximately $505,398 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
Components of deferred tax assets as of June 30, 2013 and 2012 are as follows:
|
|
June 30, 2013 |
|
|
June 30, 2012 |
| ||
Net deferred tax assets Non-current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax benefit from NOL carry-forwards |
|
|
505,398 |
|
|
|
268,723 |
|
|
|
|
|
|
|
|
|
|
Less valuation allowance |
|
|
(505,398) |
|
|
|
(268,723) |
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net of valuation allowance |
|
$ |
- |
|
|
$ |
- |
|
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
|
|
For the quarter ended June 30, 2013 |
|
|
For the quarter ended June 30, 2013 |
| ||
|
|
|
|
|
|
|
|
|
Federal statutory income tax rate |
|
|
34.0 |
% |
|
|
34.0 |
% |
|
|
|
|
|
|
|
|
|
Change in valuation allowance on net operating loss carry-forwards |
|
|
(34.0 |
) |
|
|
(34.0 |
) |
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
|
0.0 |
% |
|
|
0.0 |
% |
Note 9 Commitments and Contingencies
Contingent Common Shares Issuable under the Arizona Property Purchase Agreements
On July 18, 2011, the Company entered into an Asset Purchase Agreement (APAAR1) with Precious Metals Exploration Corp., (the Seller), to acquire a 100% interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona. The APAAR1 further provides for the issuance to the Seller of an additional 1,500,000 shares of the Companys common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver.
On July 18, 2011, the Company entered into an Asset Purchase Agreement (APAAR2) with Precious Metals Exploration Corp., (the Seller). The Purchase Price was $674,022 payable in installments in the twenty months following the closing, the company is required to pay 10% net smelter returns (NSR) royalty on the gross mineral production from the Assets until such time as it no longer owns or operates the Assets. After the full balance is paid, the NSR will reduce to 5% from that day forward. See Mineral Property
F-23
Payable Note 5 for amount of purchase price owed as of June 30, 2013.
Contingent Exploration Cost under the Alaska Property Purchase Agreements
On April 20, 2012, the Company executed a letter agreement (the Option Letter) with Endurance Gold Corporation and Endurance Resources (collectively Endurance) with respect to the Company acquiring a conditional option to acquire a 60% joint venture interest in 14 State of Alaska mineral claims consisting of a total of approximately 2,218 acres and numbered ADL703865 through ADL703878 inclusive in the Livengood Area of Alaska (the Claims). The Option Letter requires the Company to expend at least $600,000 on the Claims prior to December 31, 2014, with $150,000 to be spent in calendar year 2012. In addition the Company is required to pay $85,000 to Endurance in installments through December 31, 2014. The parties executed a formal option agreement by June 30, 2012 and the Company made initial option payment of $15,000 and expended $8,000 in exploration expenditures as per clause 7 of the letter agreement. An additional $195,800 was paid during the nine months ended December 31, 2012.
Note 10 Subsequent Events
Management has evaluated subsequent events through the date the financial statements were issued.
On August 22, 2013, the Company returned certain mineral properties known as Mine Group II, ("MGII"), or properties acquired under APAAR2 and consisting of an undivided 100% interest in 2 patented claims and 5 federal claims comprising roughly 134 acres in Mohave County, Arizona. We returned these properties because we were unable to generate sufficient investor interest to fund the development of the properties. As a result, our mineral properties have decreased $684,022 and the related debt has decreased $543,302 (See Note 5 Mineral Properties). We made payments approximating $150,947 in connection with these properties which will not be recovered:
Fiscal Year |
Amounts Paid |
2012 |
43,258 |
2013 |
69,036 |
2014 |
38,653 |
Total |
$ 150,947 |
F-24
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
Forward-looking Statements
Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of LBGO. Such forward-looking statements include those that are preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in this Annual Report: general economic or industry conditions nationally and/or in the communities in which we conduct business; fluctuations in global gold and silver markets; legislation or regulatory requirements, including environmental requirements; conditions of the securities markets; competition; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors affecting our operations, products, services and prices.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward- looking statements speak only as of the date they are made. LBGO does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Critical Accounting Policies for a 10Q
We prepare our condensed financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
For a full description of our critical accounting policies, please refer to Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations in our 2013 Annual Report on Form 10-K.
Results of Operations for the three months ended June 30, 2013 and June 30, 2012
Revenues
We have not generated any revenues for the quarters ended June 30, 2013 and June 30, 2012.
Operating Expenses
Our operating expenses for the quarters ended June 30, 2013 and June 30, 2012 were $59,597 and $102,069, respectively. Operating expenses decreased in 2013 primarily due to decreased professional fees incurred during 2013 as compared to 2012.
Exploration Costs
Our exploration costs for the quarter June 30, 2013 were $0 due to minimal funding during the period. Exploration costs were $186,300 during the quarter ended June 30, 2012. The decrease is primarily due minimal funding during the period ending June 30, 2013.
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Net loss
We have no revenues at present to meet obligations of the business and we rely upon funding from investors to continue our exploration and development. Our operating expenses also decreased during the period ending June 30, 2013. Net loss for the period ended June 30, 2013 and 2012 was $59,807 and $288,369, respectively.
Financial Condition
Total assets. Total assets at June 30, 2013 and March 31, 2013 were $1,400,503 and $1,405,029 respectively. Total assets consist of cash, prepaid expenses, website, and mineral properties. No costs were capitalized for mineral properties during the period ending June 30, 2013.
Total liabilities. Total liabilities at June 30, 2013 and March 31, 2013 were $693,488 and $706,907, respectively. Total liabilities at June 30, 2013 consist of accounts payable of $25,830 accrued expenses of $26,000, shareholder loans of $28,356, current portion of note payable of $583,302 and long term portion of note payable of $30,000 due under the Mineral Property Purchase Agreement.
Liquidity
Net cash used in operating activities for the period ending June 30, 2013 and 2012 was $32,178 and $300,986. Net cash used in investing activities for the period ending June 30, 2013 and 2012 was $1,037 and $27,265, respectively. Cash provided from financing activities for the period ending June 30, 2013 and 2012 was $68,700 and $375,000, respectively.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company had a deficit accumulated during the exploration state at June 30, 2013 of $1,397,514, a net loss of $59,807, net cash used in operating activities, of $70,751, and a $ 659,825 working capital deficiency. These factors raise substantial doubt about the Companys ability to continue as a going concern.
While we are attempting to commence explorations and generate sufficient revenues, the Companys cash position may not be sufficient enough to support our daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to commence explorations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Capital Resources.
We had no material commitments for capital expenditures as of June 30, 2013 and March 31, 2013.
Off-Balance Sheet Arrangements
We do not have any 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 is material to investors.
Contractual obligations.
On July 18, 2011, the Company entered into an Asset Purchase Agreement (APAAR1) with Precious Metals Exploration Corp., (the Seller), to acquire a 100% interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona. The APAAR1 further provides for the issuance to the Seller of an additional 1,500,000 shares of the Companys common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver. None of the purchase price is outstanding.
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On July 18, 2011, the Company entered into an Asset Purchase Agreement (APAAR2) with Precious Metals Exploration Corp., (the Seller). The Purchase Price was $674,022 payable in installments in the twenty months following the closing, the company is required to pay 10% net smelter returns (NSR) royalty on the gross mineral production from the Assets until such time as it no longer owns or operates the Assets. After the full balance is paid, the NSR will reduce to 5% from that day forward. At June 30, 2013, $583,302 of the purchase price is owed.
On August 22, 2013, the Company returned certain mineral properties known as Mine Group II, ("MGII"), or properties acquired under APAAR2 and consisting of an undivided 100% interest in 2 patented claims and 5 federal claims comprising roughly 134 acres in Mohave County, Arizona. We returned these properties because we were unable to generate sufficient investor interest to fund the development of the properties. We have made approximate payments of $136,000 in connection with these properties and these payments will not be recovered.
Under the executed agreement with Endurance Gold Corporation and Endurance Resources on April 20, 2012, the Company is required to pay $85,000 to Endurance in installments through December 31, 2014. As of June 30, 2013, the Company has paid $15,000 leaving $70,000 to be paid. Installment payments are either to be made on or before the following dates:
Contractual obligations |
Payments due by period |
3-5 years |
More than 5 years | ||
Total |
Less than 1 year |
1-3 years | |||
[Long-Term Debt Obligations] |
$ 70,000 |
$40,000 |
$30,000 |
- |
- |
Short term Contractual Obligation |
583,302 |
583,302 |
- |
- |
- |
Total |
$ 653,302 |
$ 623,302 |
30,000 |
|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide this.
ITEM 4. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, our principal executive officer who is also our principal financial officer is responsible for conducting 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 Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of June 30, 2013 because we do not have sufficient staff to segregate responsibilities. We plan to seek to correct these deficiencies at such time as our operations require additional personnel, but we do not believe this will occur in the foreseeable future.
Material weaknesses noted were: lack of a functioning audit committee; lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives affecting authorization, recordkeeping, custody of assets, and reconciliations; and, management is dominated by a single individual/small group without adequate compensating controls.
There were no changes in the Companys internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Companys internal control over financial reporting.
For a full discussion of our internal control over financial reporting, please refer to Item 9A, Controls and Procedures in our 2013 Annual Report on Form 10-K
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Companys business, financial condition or results of operations.
ITEM 1A. RISK FACTORS
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide this information.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On October 11, 2011, the Company executed a Share Issuance Agreement with American Gold Holdings, Ltd. (AGH) that allows the Company to issue its equity in Units with each unit comprised of one share of common stock and a warrant to purchase one share of common stock. The issue price of the Unit will be the greater of $0.45 or 90% of the volume weighted average of the closing price of common stock, for the five (5) banking days immediately preceding the date of the notice, as quoted on OTC markets, or other source of stock quotes as agreed to by both parties. The exercise price of the Warrants will be 130% of the price of the Unit and the term of the Warrants will be three (3) years from the date of issuance.
The Share Issuance Agreement commits AGH to make advances to the Company up to $ 15,000,000 in tranches of no more than $1,000,000 each and in multiples of $25,000 until October 11, 2013 (the completion date) or to be extended for an additional term of up to twelve (12) months at the option of the Company or AGH upon written notice on or before the completion date.
On October 28, 2011 and November 12, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000 and $200,000, respectively. The Company issued 222,222 and 444,444 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On December 15, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000. The Company issued 101,010 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advance.
On February 7, 2012 and February 8, 2012, the Company issued Advance Notices to and received the funds from AGH of $25,000 and $225,000, respectively. The Company issued 55,556 and 500,000 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On March 21, 2012, the Company issued Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On April 23, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On May 18, 2012, the Company issued Advance Notices to and received the funds from AGH of $75,000. The Company issued 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On June 5, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at
4
$0.45 per Unit for the advances.
On June 11, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On June 25, 2012, the Company issued Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On August 1, 2012, the Company issued Advance Notices to and received the funds from AGH of $75,000. The Company issued 166,667 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
On September 26, 2012, the Company issued Advance Notices to AGH for $50,000 which has been included in Stock Subscriptions Receivable. The Company issued 111,111 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
During November 2012, the Company issued Advance Notices to AGH for $100,000 which has been included in Stock Subscriptions Receivable. The Company issued 222,222 Units consisting of (i) one share of the Companys common stock and (ii) a warrant to purchase one share of the Companys common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
(a) Exhibits required by Item 601 of Regulation SK.
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
6