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EX-32 - CERTIFICATIN - Star Gold Corp.ex32srgz103113.htm
EX-31 - CERTIFICATION - Star Gold Corp.exhibit31srgz103113.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 (Mark One)
x Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the quarterly period ended October 31, 2013

¨ Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period ________ to ________

COMMISSION FILE NUMBER 000-52711


 STAR GOLD CORP.

(Exact name of the registrant business issuer as specified in its charter) 

NEVADA

27-0348508

(State or other jurisdiction of incorporation or organization)

 (IRS Employer Identification No.)

611 E. Sherman Avenue

Coeur d'Alene, Idaho

(Address of principal executive office)

83814

(Postal Code)

(208) 664-5066

(Issuer's telephone number)

 

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 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 checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer  [ ]

 Accelerated Filer [ ]

 Non-Accelerated Filer [ ]

Smaller Reporting Company [x]


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


As of November 30, 2013 there were 35,036,326 shares of issuer’s common stock outstanding.












TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION


ITEM 1.  

FINANCIAL STATEMENTS (UNAUDITED)


BALANCE SHEETS AT OCTOBER 31, 2013 AND APRIL 30, 2013


STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS

ENDED OCTOBER 31, 2013 AND 2012, AND FOR THE PERIOD FROM DECEMBER 8, 2006 (INCEPTION) TO OCTOBER 31, 2013


STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED OCTOBER 31, 2013 AND

2012, AND FOR THE PERIOD FROM DECEMBER 8, 2006 (INCEPTION) TO OCTOBER 31, 2013

NOTES TO THE FINANCIAL STATEMENTS


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

   

AND RESULTS OF OPERATIONS


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


ITEM 4.

CONTROLS AND PROCEDURES


PART II - OTHER INFORMATION


ITEM 1.

 

LEGAL PROCEEDINGS.


ITEM 1A.

RISK FACTORS.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


ITEM 3.

DEFAULTS ON SENIOR SECURITIES


ITEM 4.

 

MINE SAFETY DISCLOSURES


ITEM 5.

 

OTHER INFORMATION


ITEM 6.

EXHIBITS


SIGNATURES








PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

STAR GOLD CORP.

(An Exploration Stage Company)

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

October 31, 2013

 

April 30, 2013

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 $                 1,008,288

 

 $                    353,571

 

 

Receivable from sale of stock

 

 

                         60,000

 

                       334,000

 

 

Prepaid expenses

 

 

                         11,143

 

                         68,482



 

 

TOTAL CURRENT ASSETS

 

 

                    1,079,431

 

                       756,053



EQUIPMENT AND MINING INTERESTS, net (NOTE 5)

 

 

                       395,768

 

                       384,725



OTHER LONG-TERM ASSETS

 

                         21,600

 

                         21,600


TOTAL ASSETS

 

 $                 1,496,799

 

 $                 1,162,378


LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

 $                        9,267

 

 $                        8,897

 

 

Other accrued liabilities

 

                           4,215

 

                         11,700



 

 

 

TOTAL CURRENT LIABILITIES

 

                         13,482

 

                         20,597



TOTAL LIABILITIES

 

                         13,482

 

                         20,597



COMMITMENTS AND CONTINGENCIES (NOTE 5)

 

                                 -   

 

                                 -   



STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Preferred Stock, $.001 par value; 10,000,0000 shares authorized, none issued and outstanding

 

 

                                 -   

 

                                 -   

 

 

Common Stock, $.001 par value;  300,000,000 shares authorized; 35,036,326 and 30,612,501 shares issued and outstanding, respectively.

 

                         35,036

 

                         30,612

 

 

Additional paid-in capital

 

                    8,527,848

 

                    7,293,682

 

 

Accumulated deficit

 

                 (7,079,567)

 

                  (6,182,513)

 

 



 

TOTAL STOCKHOLDERS' EQUITY

 

 

 

                    1,483,317

 

                    1,141,781

 


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 $                 1,496,799

 

 $                 1,162,378

 

 

 

 

 

 

 

 

 

 

 

 

 





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


3



STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS (UNAUDITED)






 

 

 

 

 

 

 



Three months ended October 31,

 

Six months ended October 31,

 

From inception of December 6, 2008

to

October 31, 2013

 

 

 

 

 

 

 

2013

 

2012

 

2013

 

2012

 


REVENUE

 

 

 $                    -

 

 $                    -

 

 $                  -

 

 $                  -

 

 $                           -


COST OF REVENUE

 

 

                       -

 

                       -

 

                     -

 

                     -

 

                              -


GROSS PROFIT

 

 

                       -

 

                       -

 

                     -

 

                     -

 

                              -


OPERATING EXPENSE

 

   

 

   

 

   

 

   

 

   

 

Mineral exploration expense

 

             54,955

 

           493,528

 

         516,296

 

         658,975

 

               1,858,730

 

Legal and professional fees

 

             70,063

 

             41,103

 

         108,260

 

           94,565

 

                  651,824

 

Management and administrative

 

           177,575

 

           287,666

 

         269,053

 

         580,203

 

               1,991,208

 

Depreciation

 

               1,479

 

               1,591

 

             2,957

 

             2,958

 

                    10,222

 

Directors fees

 

                       -

 

               3,000

 

                750

 

             3,000

 

                    12,950


 

TOTAL OPERATING EXPENSES

 

           304,072

 

           826,888

 

         897,316

 

      1,339,701

 

               4,524,934


LOSS FROM OPERATIONS

 

          (304,072)

 

          (826,888)

 

       (897,316)

 

    (1,339,701)

 

              (4,524,934)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

                       -

 

                       -

 

                     -

 

                     -

 

              (1,639,575)

 

Amortization of debt discount

 

                       -

 

                       -

 

                     -

 

       (119,821)

 

                 (874,421)

 

Financing expense

 

                       -

 

              (8,000)

 

                     -

 

           (8,000)

 

                   (13,700)

 

Interest income (expense)

 

                  159

 

                 (122)

 

                262

 

              (236)

 

                   (26,937)


 

TOTAL OTHER INCOME (EXPENSE)

                  159

 

              (8,122)

 

                262

 

       (128,057)

 

              (2,554,633)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


NET LOSS BEFORE INCOME TAXES

 

          (303,913)

 

          (835,010)

 

       (897,054)

 

    (1,467,758)

 

              (7,079,567)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Provision for income taxes

 

                       -

 

                       -

 

                     -

 

                     -

 

                              -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


NET LOSS

 

 

 $       (303,913)

 

 $       (835,010)

 

 $    (897,054)

 

 $ (1,467,758)

 

 $           (7,079,567)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Basic and diluted loss per share

 

 $             (0.01)

 

 $             (0.04)

 

 $          (0.03)

 

 $          (0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Basic and diluted weighted average number shares outstanding

 

      31,904,744

 

      22,948,752

 

    31,258,623

 

    21,827,491

 

 




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


4



STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS (UNAUDITED)






 

Six months ended October 31,

 

From inception of December 6, 2008 to                       October 31, 2013

 

2013

 

2012

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net loss

 $              (897,054)

 

 $           (1,467,758)

 

$           (7,079,567)

Adjustments to reconcile net loss to cash used by operating activities

 

 

 

 

 

Common stock issued in lieu of interest

                              -   

 

146

 

146

Common stock issued in consideration of services

8,250

 

                               -   

 

100,650

Stock based compensation

129,540

 

354,048

 

1,098,187

Interest expense from debt discounts

                               -   

 

119,821

 

874,421

Loss on extinguishment of debt

                               -   

 

                               -   

 

1,639,575

Depreciation

2,957

 

2,958

 

10,222

Changes in assets and liabilities:

 

 

 

 

 

Prepaid expenses

57,339

 

105,027

 

(11,143)

Accounts payable

370

 

10,310

 

29,366

Other accrued expenses

(7,485)

 

152,880

 

41,192

Net cash used by operating activities

(706,083)

 

(722,568)

 

(3,296,951)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Payments for mining interests

(14,000)

 

(11,000)

 

(231,000)

Purchase of equipment

                               -   

 

(1,986)

 

(28,993)

Restricted cash as collateral for exploration bonds

                               -   

 

                               -   

 

(21,600)

Net cash used by investing activities

(14,000)

 

(12,986)

 

(281,593)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from issuance of stock and warrants

1,100,800

 

                               -   

 

2,060,146

Proceeds from exercise of warrants

 

 

256,734

 

1,137,486

Proceeds from convertible debentures and warrants

                               -   

 

250,000

 

969,600

Receivable from sale of stock

274,000

 

                               -   

 

274,000

Proceeds from short-term notes, related party

                               -   

 

30,000

 

175,600

Repayment of short-term notes, related party

                               -   

 

                              -   

 

(30,000)

Net cash provided by financing activities

1,374,800

 

536,734

 

4,586,832

Net increase (decrease) in cash

654,717

 

(198,820)

 

1,008,288

CASH AT BEGINNING OF PERIOD

353,571

 

225,940

 

                               -   

CASH AT END OF PERIOD

$               1,008,288

 

$                    27,120

 

 $             1,008,288




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


5



STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS (UNAUDITED)




 

For the six months ended October 31,

 

From inception of December 6, 2008

to

October 31, 2013

 

2013

 

2012

 

NON-CASH FINANCING AND INVESTING ACTIVITIES:

 

 

 

 

 

Options to purchase common stock issued for

 

 

 

 

 

mining interests

 $                            -   

 

 $                            -   

 

 $                111,249

Common stock payable/issued for mining interests

                               -   

 

                               -   

 

37,000

Short term notes, related party converted to debenture

                               -   

 

                               -   

 

145,400

Debentures converted to common stock payable

                               -   

 

250,000

 

1,150,000

Accrued interest paid with common stock payable

                               -   

 

                               -   

 

22,276

Executive compensation paid with common stock payable

                               -   

 

                               -   

 

92,000

Common stock issued for receivable from sale of stock

60,000

 

                               -   

 

394,000

Common stock issued for common stock payable

                               -   

 

1,010,710

 

1,016,326





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


6



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013



NOTE 1 - NATURE OF OPERATIONS


Star Gold Corp. (the "Company") was initially incorporated as Elan Development, Inc., in the State of Nevada on December 8, 2006. The Company was originally organized to explore mineral properties in British Columbia, Canada but the Company is currently focusing on gold-bearing properties in Nevada.


The financial statement represents those of an exploration stage company whose main focus is in the exploration of gold bearing properties.  The Company's main business consists of assembling and/or acquiring land packages and mining claims the Company believes have potential mining reserves, and expending capital to explore these claims by drilling, geophysical work or other exploration work deemed necessary.  The business is a high risk business as there is no guarantee that the Company's exploration work will ultimately discover or produce any economically viable minerals.


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. The Company has not produced any revenue from its principal business and is an exploration stage company as defined by the Accounting Standard Codification (ASC) Topic 915 “Accounting and Reporting by Development Stage Enterprises”.  Until such interests are engaged in commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the exploration stage.  


Use of Estimates


The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to asset impairments and stock option valuation.  Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations.


Cash and cash equivalents


For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents.  


Restricted cash


Restricted cash represents collateral for bonds held for exploration permits and is presented as other long-term assets in the balance sheet.


Fair Value Measures


ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820") requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1:  Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.




7



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013



Level 2:  Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3:  Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


Mining Interests and Mineral Exploration Expenditures


Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mining properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mining interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.


Equipment


Equipment are stated at cost. Depreciation of equipment is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from three to seven years.  Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses.


Reclamation and Remediation


The Company's operations are subject to standards for mine reclamation that have been established by various governmental agencies.  In the period in which the Company incurs a contractual obligation for the retirement of tangible long-lived assets, the Company will record the fair value of an asset retirement obligation as a liability.  A corresponding asset will also be recorded and depreciated over the life of the asset.  After the initial measurement of an asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation.  To date, the Company has not incurred any contractual obligation requiring recording either a liability or associated asset.


Impaired Asset Policy


The Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC Topic 360, "Accounting for the Impairment or Disposal of Long-lived Assets". The Company determines impairment by comparing the undiscounted net future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.


Stock-based Compensation


The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten year maximum term and varying vesting periods as determined by the Board.  The value of common stock awards is determined based on the closing price of the Company’s stock on the date of the award.




8



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013



Loss Per Share


Basic Earnings Per Share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and warrants.


The dilutive effect of outstanding securities for three and six months ended October 31, 2013 and 2012, would be as follows:


 

 

October 31, 2013

 

October 31, 2012

 

Stock options

3,197,000

 

2,532,000

 

Warrants

3,929,548

 

6,811,793

 

Total Possible Dilution

7,126,548

 

9,343,793


At October 31, 2013 and 2012, respectively, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.


Income Taxes


Deferred income tax liabilities or assets at the end of each period are determined using the tax rates expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.


Reclassifications


Certain reclassifications have been made to the prior period financial statements in order to conform to the 2013 presentation.  These reclassifications have no effect on net loss, total assets or accumulated deficit.


NOTE 3 – RECEIVABLE FROM SALE OF STOCK


As of April 30, 2013, holders exercised 2,226,667 share purchase warrants at $0.15 per share.  Proceeds of $334,000 were received during the six months ended October 31, 2013.  As of October 31, 2013, receivable from the sale of stock was $60,000, proceeds of which were received thereafter.


NOTE 4 – PREPAID EXPENSES


The following is a summary of the Company’s prepaid expenses at October 31, 2013 and April 30, 2013:


 

 

October 31, 2013

 

April 30, 2013

 

Exploration expense

 $                           -   

 

 $                 41,849

 

Directors and officers liability insurance

11,143

 

26,633

 

Total prepaid expenses

 $                 11,143

 

 $                 68,482


At April 30, 2013, exploration expense was prepaid as deposit on unbilled drilling activity.  The prepaid balance was reduced as invoices were applied to ongoing drilling and exploration activities which the Company recognized as exploration expense during the six months ended October 31, 2013.




9



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013



NOTE 5 – EQUIPMENT AND MINING INTERESTS


The following is a summary of the Company's equipment and mining interests at October 31, 2013 and April 30, 2013, respectively:


 

 

October 31, 2013

 

April 30, 2013

 

Equipment

$                  28,992

 

$                  28,992

 

Less accumulated depreciation

(10,223)

 

(7,266)

 

Equipment, net of accumulated depreciation

18,769

 

21,726

 

Mining interests

376,999

 

362,999

 

Total

$                395,768

 

$                384,725


The Longstreet Property


The schedule of remaining annual payments, minimum expenditures and number of stock options to be issued pursuant to the Longstreet Agreement is as follows:


 

Required expenditure

 

Payment to optioner

 

Annual stock option obligation

 

Annual stock grant obligation

January 15, 2014

 $           450,000

 

 $          36,000

 

                  25,000

 

                25,000

January 15, 2015

              550,000

 

             56,000

 

                  25,000

 

                25,000

January 15, 2016

              750,000

 

             56,000

 

                  25,000

 

                25,000

January 15, 2017

           1,000,000

 

             56,000

 

                  25,000

 

                25,000

Total

 $        2,750,000

 

 $        204,000

 

                100,000

 

              100,000


The Company has performed substantially all required expenditures for the option agreement period ending January 15, 2014.  


Excalibur Property


The Excalibur Property Option Agreement was amended on January 30, 2012 revising the payment date of the final required expenditure to August 31, 2012 and thereafter amended on August 31, 2012 extending the payment date of the final expenditure to August 31, 2013.  The Excalibur Property Option Agreement was subsequently amended on September 7, 2012, revising the payment date on the final required expenditure to October 31, 2013.  On July 12, 2013, the Excalibur Property Option Agreement was amended revising the payment date of the final required expenditure from October 31, 2013 to October 31, 2014.


The schedule of remaining minimum expenditures and number of stock options to be issued pursuant to the Excalibur Property agreement is as follows:


 

 

 

 

 

 

 

Required expenditure

October 31, 2013

 

 

 

 

 

 

 $                           -

October 31, 2014

 

 

 

 

 

 

100,000

Total

 

 

 

 

 

 

$                100,000




10



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013




The Jet Property


The Jet Property Option Agreement was amended on September 7, 2012 revising the payment date of the required 2013 expenditure from July 7, 2013 to August 31, 2013; the extension was granted only for the 2013 payment.   On July 12, 2013, the Jet Property Option Agreement was amended revising the payment date of the required 2013 expenditure from August 31, 2013 to August 31, 2014.


The schedule of remaining annual payments and minimum expenditures pursuant to the Jet Agreement is as follows:


 

 

 

 

 

Required expenditure

 

Payment to optioner

July 7, 2014

 

 

 

 

$                  10,000

 

$                    5,000

August 31, 2014

 

 

 

 

20,000

 

                     -   

July 7, 2015

 

 

 

 

10,000

 

5,000

July 7, 2016

 

 

 

 

10,000

 

5,000

July 7, 2017

 

 

 

 

10,000

 

5,000

Total

 

 

 

 

$                  60,000

 

$                  20,000


The following is a summary of capitalized mineral interests as of October 31, 2013 and April 30, 2012, respectively:


 

 

 

 

 

October 31, 2013

 

April 30, 2013

Longstreet Property

 

 

 

 

$                180,499

 

$                171,499

Excalibur Property

 

 

 

 

176,500

 

176,500

Jet Property

 

 

 

 

20,000

 

15,000

Total

 

 

 

 

$                376,999

 

$                362,999


NOTE 6– RELATED PARTY TRANSACTIONS


On September 1, 2011, the Company moved its offices to Coeur d’Alene, Idaho and leased office space for $2,500 per month plus a proportionate share of utilities and insurance from Marlin Property Management, LLC (“Marlin”) an entity owned by the spouse of the Company’s then President and current Chairman of the Board. For the three months and six months ended October 31, 2013 and 2012, $8,581 and $8,643, and $16,994 and $17,227, respectively, was paid to this related entity inclusive of the Company’s pro-rata share of common expenses.  


NOTE 7 - WARRANTS


The following is a summary of the Company’s warrants outstanding:



11



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013




 

 

Shares

 

Weighted Average Exercise Price

 

Expiration Date

 

 

 

 

 

 

 

 

Outstanding at April 30, 2012

7,690,000

 

 $                  0.16

 

 

 

Issued - June 18, 2012

833,334

 

0.75

 

June 18, 2014

 

Issued - January 18, 2013

894,614

 

0.60

(a)

January 18, 2015

 

Exercised

(7,593,233)

 

(0.15)

 

 

 

Expired

(96,767)

 

(1.33)

 

 

 

Outstanding at April 30, 2013

1,727,948

 

 $                  0.67

 

 

 

Issued - October 4, 2013

2,201,600

 

0.50

 

October 4, 2014

 

Exercised

                 -   

 

 

 

 

 

Expired

                 -   

 

 

 

 

 

Balance outstanding at October 31, 2013

3,929,548

 

 $                  0.58

 

 

 

 

 

 

 

 

 



NOTE 8 - STOCK OPTIONS


Options issued for mining interests


In consideration for mining interests on several properties (see Note 5), the Company is obligated to issue a total of 400,000 stock options based on "fair market price" which is considered to be the closing price of the Company's common stock on the grant dates.  


The following is a summary of the Company’s options issued and outstanding in conjunction with certain mining interest agreements on several properties:


 

 

For the three and six months ended

 

For the three and six months ended

 

 

October 31, 2013

 

October 31, 2012

 

 

Shares

 

Price (a)

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

 

 

Beginning balance, outstanding

              300,000

 

 $                     0.37

 

                  275,000

 

 $                     0.36

 

Issued

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Exercised

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Expired

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Balance outstanding

              300,000

 

 $                     0.37

 

                  275,000

 

 $                     0.36

 

(a) Weighted average exercise price per share

 

 


Future remaining stock option obligations under the terms of property agreements detailed in Note 5 are as follows:


 

Fiscal year ending April 30,

 

 

 

 

 Stock options

 

 

 

2014

 

 

 

 

                    25,000

 

 

 

2015

 

 

 

 

                    25,000

 

 

 

2016

 

 

 

 

                    25,000

 

 

 

2017

 

 

 

 

                    25,000

 

 

 

 

 

 

 

 

                  100,000

 

 



12



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013







The aggregate intrinsic value of options issued for mining interests vested and exercisable was $31,000 based on the Company's closing price of $0.40 per common share at October 31, 2013.  


Options issued for consulting services


As per an agreement fully executed on October 3, 2012, in consideration for consulting and advisory services rendered, the Company is obligated to issue a total of 1,000 stock options based on 5 day variable weighted-average price (VWAP) at the end of each month of the associated consulting contract.  The consultant options vest on the first day of the following month of service and are exercisable for a period of six months following the termination of the agreement.  The Company has estimated the fair value of these option grants using the Black-Scholes model with the following information and range of assumptions:


 

 

 

 

 

For the six months ended

 

 

 

 

 

October 31, 2013

 

October 31, 2012

 

 

 

 

 

 

 

 

 

Options issued

 

 

 

                      6,000

 

                      2,000

 

Weighted average volatility

 

 

 

279.9% to 366.6%

 

453.0% to 465.9%

 

Expected dividends

 

 

 

                           -   

 

                           -   

 

Expected term (years)

 

 

 

                             1

 

1

 

Risk-free rate

 

 

 

0.10% to 0.15%

 

0.15% to 0.17%


The following is a summary of the Company’s options issued and outstanding associated with certain consulting agreements:


 

 

For the three months ended

 

For the three months ended

 

 

October 31, 2013

 

October 31, 2012

 

 

Shares

 

Price (a)

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

 

 

Beginning balance, outstanding

                11,000

 

 $                     0.46

 

                           -   

 

 $                        -   

 

Issued

                  3,000

 

                        0.39

 

                      2,000

 

                        0.45

 

Exercised

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Expired

                (2,000)

 

                      (0.45)

 

                           -   

 

                           -   

 

Balance outstanding

                12,000

 

 $                     0.44

 

                      2,000

 

 $                     0.45

(a) Weighted average exercise price per share


 

 

Shares

 

Price (a)

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

 

 

Beginning balance, outstanding

                  8,000

 

 $                     0.46

 

                           -   

 

 $                        -   

 

Issued

                  6,000

 

                        0.42

 

                      2,000

 

                        0.45

 

Exercised

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Expired

                (2,000)

 

                      (0.45)

 

                           -   

 

                           -   

 

Balance outstanding

                12,000

 

 $                     0.44

 

                      2,000

 

 $                     0.45

 

(a) Weighted average exercise price per share

 

 

 

 


Fair value of the option grants for consulting services for the three months ended October 31, 2013 and 2012, was $1,109 and $1,508, respectively.  Fair value of the option grants for consulting services for the six months ended October 31, 2013 and 2012, was $2,250 and $1,508, respectively.  These costs are classified under management and administrative expense.




13



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013



The aggregate intrinsic value of consultant options vested and exercisable was $99 based on the Company's closing price of $0.40 per common share at October 31, 2013.  


Options issued under the 2011 Stock Option/Restricted Plan


The Company established the 2011 Stock Option/Restricted Stock Plan.  The Stock Option Plan is administered by the Board of Directors and provides for the grant of stock options to eligible individual including directors, executive officers and advisors that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.  


The Stock Option Plan has a fixed maximum percentage of 10% of the Company's outstanding shares that are eligible for the plan pool, whereby the number of Shares under the plan increases automatically increases as the total number of shares outstanding increase.  The number of shares subject to the Stock Option Plan and any outstanding awards will be adjusted appropriately by the Board of Directors if the Company's common stock is affected through a reorganization, merger, consolidation, recapitalization, restructuring, reclassification dividend (other than quarterly cash dividends) or other distribution, stock split, spin-off or sale of substantially all of the Company's assets.  


The Stock Option plan also has terms and conditions, including without limitations that the exercise price for stock options granted under the Stock Option Plan must equal the stock's fair market value, based on the closing price per share of common stock, at the time the stock option is granted.  The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes model and commonly utilized assumptions associated with the Black-Scholes methodology.  Options granted under the Plan have a ten year maximum term and varying vesting periods as determined by the Board.  

On June 18, 2012 the Board of Directors authorized the grant of 1,725,000 options to purchase shares of common stock of the Company to various directors, officers and advisors.  The options have an exercise price of $0.30 based on the closing price of the Company's common stock on the date of grant and vest over one year.

On May 22, 2013 the Board of Directors authorized the grant of 675,000 options to purchase shares of common stock of the Company to various directors, officers and consultants.  The options have an exercise price of $0.29 based on the closing price of the Company’s common stock on the date of grant and vest over one year.  

The fair value of each option award was estimated on the date of the grant using the information and assumptions noted in the following table:


 

 

 

 

 

 

 

 

 

 

 

Six months ended

October 31, 2013

 

Six months ended

October 31, 2012

Expected volatility

 

 

 

 

 

305.3%

 

276.1% to 350.2%

Weighted average volatility

 

 

 

 

 

303.8%

 

303.4%

Expected dividends

 

 

 

 

 

                           -   

 

                           -   

Expected term (years)

 

 

 

 

 

                          3.1

 

                          3.1

Expected forfeiture weight

 

 

 

 

 

0%

 

0%

Risk-free rate

 

 

 

 

 

0.11%

 

0.11% to 3.07%


The following is a summary of the Company’s options issued and outstanding in conjunction with the Company’s Stock Option Plan:



14



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013




 

 

 

 

 

 

 

 

For the three months ended

 

For the three months ended

 

 

 

 

 

 

 

 

October 31, 2013

 

October 31, 2012

 

 

 

 

 

 

 

 

Shares

 

Price (a)

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, outstanding

           2,890,000

 

 $                     0.40

 

               2,255,000

 

 $                     0.42

 

Issued

 

 

 

                       -   

 

 

 

                           -   

 

                           -   

 

Exercised

 

 

 

                       -   

 

                           -   

 

                           -   

 

                           -   

 

Forfeited or rescinded

 

 

                (5,000)

 

                      (0.78)

 

                           -   

 

                           -   

 

Balance outstanding

 

 

 

           2,885,000

 

 $                     0.40

 

               2,255,000

 

 $                     0.42

 

(a) Weighted average exercise price per share

 

 

 



The following table summarizes additional information about the options under the Company’s Stock Option Plan as of October 31, 2013:


 

For the three months ended

 

For the three months ended

 

October 31, 2013

 

October 31, 2012

 

Shares

 

Price (a)

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

Beginning balance, outstanding

2,215,000

 

$                    0.43

 

530,000

 

$                     0.83

Issued

675,000

 

0.29

 

1,725,000

 

0.30

Exercised

                       -   

 

 

 

                        -   

 

 

Forfeited or rescinded

(5,000)

 

(0.78)

 

                        -   

 

                        -   

Balance outstanding

2,885,000

 

$                    0.40

 

2,255,000

 

$                     0.42



 

 

 

Options outstanding

 

Options exercisable

 

Date of Grant

 

Shares

 

Price (a)

 

Life

 

Shares

 

Price (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

May 27, 2011

 

283,333

 

 $                 0.90

 

                        7.58

 

                  283,333

 

 $                     0.90

 

May 22, 2012

 

226,667

 

                    0.78

 

                        8.39

 

                  151,142

 

                        0.78

 

June 18, 2012

 

1,700,000

 

                    0.30

 

                        8.64

 

               1,700,000

 

                        0.30

 

May22, 2013

 

675,000

 

                    0.29

 

                        9.56

 

                  337,500

 

                        0.29

 

Total options

 

2,885,000

 

 $                 0.40

 

                        8.73

 

               2,471,975

 

 $                     0.40


The total value of the Plan stock option awards is expensed ratably over the vesting period of the employees receiving the awards.  As of October 31, 2013, total unrecognized compensation cost related to stock-based options and awards is $156,669 and the related weighted average period over which it is expected to be recognized is approximately .42 years.  There are 2,471,975 options vested under the Plan at October 31, 2013, and 413,025 unvested options as of the same date.  


The average remaining contractual term of the options both outstanding and exercisable at October 31, 2013 was 8.73 years.  No options were exercised during the six months ended October 31, 2013.  


Total compensation charged against operations under the plan for employees and advisors was $78,353 and $159,084 for the three months ended October 31, 2013 and 2012, respectively and $127,290 and $352,469 for the six months ended thereof.  These costs are classified under management and administrative expense.



15



STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

OCTOBER 31, 2013




The aggregate intrinsic value of options under the Plan vested and exercisable at October 31, 2013, was $207,125 based on the Company's closing price of $0.40 per common share at October 31, 2013.  


The following is a summary of the Company’s stock options outstanding and vested:


 

 

Shares

 

Weighted Average Exercise Price

 

Expiration Date

 

 

 

 

 

 

 

 

Options issued for mining interests

          300,000

 

 $               0.37

 

April 11, 2019 through January 15, 2023

 

Options issued for consulting services

            12,000

 

                  0.44

 

October 31, 2013 through October 31, 2014

 

Options issued under the 2011 Stock Option/Restricted Plan

       2,885,000

 

                  0.40

 

May 30, 2021 through May 22, 2023

 

Outstanding at October 31, 2013

       3,197,000

 

 $               0.40

 

 

 

 

 

 

 

 

 

 

Total vested stock options

       2,783,975

 

 

 

 


The aggregate intrinsic value of all options vested and exercisable at October 31, 2013, was $238,224 based on the Company's closing price of $0.40 per common share at October 31, 2013.  The Company's current policy is to issue new shares to satisfy option exercises.  


NOTE 9 – STOCKHOLDERS’ EQUITY


On October 4, 2013, the Company completed a private placement of its securities wherein it raised a total of $1,100,800 (the “Offering”).  The Offering consisted of the sale of “units” of the Company’s securities at the per unit price of $0.25.  Pursuant to the Offering, the Company issued 4,403,200 shares of its common stock and warrants to purchase and additional 2,201,600 shares of its common stock.  Warrants issued pursuant to the Offering entitle the holders thereof to purchase shares of common stock for the price of $0.50 per share.  The term of each warrant is for one year after its  issuance date.

 

On October 31, 2013, the Company issued 20,625 shares of common stock in lieu of cash in consideration of fees for Board of Director meetings accrued through October 31, 2013.  These shares were value at $8,250 or $0.40 per share which approximated the fair value of the shares at the date of issuance.











16






ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.  Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future.  These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.  

Any statement that expresses or involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or states that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

·

Risks related to the Company’s properties being in the exploration stage;

·

Risks related to the mineral operations being subject to government regulation;

·

Risks related to the Company’s ability to obtain additional capital to develop the Company’s resources, if any;

·

Risks related to mineral exploration and development activities;

·

Risks related to mineral estimates;

·

Risks related to the Company’s insurance coverage for operating risks;

·

Risks related to the fluctuation of prices for precious and base metals, such as gold, silver and copper;

·

Risks related to the competitive industry of mineral exploration;

·

Risks related to the title and rights in the Company’s mineral properties;

·

Risks related to the possible dilution of the Company’s common stock from additional financing activities;

·

Risks related to potential conflicts of interest with the Company’s management;

·

Risks related to the Company’s shares of common stock;

This list is not exhaustive of the factors that may affect the Company’s forward-looking statements.  Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of Business” and “Management’s Discussion and Analysis” of this Quarterly Report.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  Star Gold Corp. disclaims 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, except as required by law.  The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Annual Reports on Form 10-K, reports on Form 10-Q and Current Reports on Form 8-K.

Star Gold Corp qualifies all forward-looking statements contained in this Quarterly Report by the foregoing cautionary statement.

Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements.” These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect,” and similar expressions include the Company’s expectations and objectives regarding its future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption “Management’s Discussion and Analysis or Plan of Operation” and elsewhere in this Quarterly Report.

As used in this Quarterly Report, the terms “we,” “us,” “our,” “Star Gold,” and the “Company”, mean Star Gold Corp., unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.



17





Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending April 30, 2013.  The following statements may be forward-looking in nature and actual results may differ materially.

Corporate Background

The Company was originally incorporated on December 8, 2006 under the laws of the State of Nevada as Elan Development, Inc.  On April 25, 2008, the name of the company was changed to Star Gold Corp.   Star Gold Corp. is an exploration stage company engaged in the acquisition and exploration of precious metal deposit properties and advancing them toward production.  The Company is engaged in the business of exploring, evaluating and acquiring mineral prospects with the potential for economic deposits of precious and base metals.


Star Gold Corp. currently leases with an option to acquire 113 unpatented mining claims (covering approximately 490 Hectares) located in the State of Nevada and known as the Longstreet Property.

  

The Company currently owns the rights to acquire up to a 100% mining interest (covering a total of 50 unpatented claims) in a mineral property (known as the Excalibur Property) located in the State of Nevada.


The Company has completed an initial exploration program on the Excalibur Property, which included Geological Mapping, Rock Sampling and Assaying.  Based on this analysis the Company has decided to move forward with the permitting of this property and associated drilling program.  The permitting was completed in June 2010 and the drilling program originally commenced the week of June 20th, 2010.  The Company conducted additional drilling and exploration of the Excalibur Property which commenced in late October 2012.


On July 7th, 2010, Star Gold Corp. entered into a Property Option agreement whereby it may earn a 100% mineral interest in a Property located in the State of Nevada (approximately 300 kilometers northwest of Las Vegas) known as the Jet Property.


The Company has no patents, licenses, franchises or concessions which are considered by the Company to be of importance.  The business is not of a seasonal nature.  Since the potential products are traded in the open market, the Company has no control over the competitive conditions in the industry.  

Overview of Mineral Exploration and Current Operations

Star Gold Corp. is a mineral exploration stage company with no producing mines.   Mineral exploration is essentially a research activity that does not produce a product.  Successful exploration often results in increased project value that can be realized through the optioning or selling of the claimed site to larger companies.  As such the Company acquires properties which it believes have potential to host economic concentrations of minerals, particularly gold and silver.  These acquisitions have and may take the form of unpatented mining claims on federal land, or lease claims on private property owned by others.  An unpatented mining claim is an interest that can be acquired in the mineral rights on open lands of the federal owned public domain.  Claims are staked in accordance with the General Mining Law of 1872, recorded with the United States government pursuant to laws and regulations established by the Bureau of Land Management  The Company intends to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities.

Compliance with Government Regulations

If the Company decides to continue with the acquisition and exploration of mineral properties in the State of Nevada it will be required to comply with all United States and Nevada regulations, rules and directives applicable to the exploration of minerals in the United States generally and the State of Nevada specifically.

United States

Mining in the United States generally and specifically the State of Nevada is subject to federal, state and local law. Three types of laws are of particular importance to the Company’s U.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.



18





Land Ownership and Mining Rights.

On Federal Lands, mining rights are governed by the General Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the General Mining Law and Nevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, the Company has the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable federal, state, and local laws, regulations and ordinances.

Star Gold's ability to drill at the Longstreet project is dependent on approval pursuant to a Plan of Operation granted by the USFS. The current Plan of Operation (POO #04-10-12) has expired and Star Gold through its vendor Minquest has applied for a new Plan Of Operation which will determine future drilling. There is no certainty of when a new Plan of Operation will be issued.


Mining Operations

The State of Nevada likewise requires various permits and approvals before mining operations can begin, although the state and federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. The Nevada Department of Environmental Protection, which is referred to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on the Nevada property. Local jurisdictions (such as Eureka County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

Environmental Law

The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of the Company’s operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to the Company’s proposed operations may be encountered. The Company is currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Unless and until a mineral resource is proved, it is unlikely Star Gold Corp. operations will move beyond the exploration stage. If in the future the Company decides to proceed beyond exploration, there will be numerous additional notifications, permit applications, and other regulatory decisions to be addressed at that time.

Competition

Star Gold Corp. competes with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration and development companies with whom the Company competes have greater financial and technical resources.  Accordingly, competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on Star Gold Corp.’s ability to finance further exploration and to achieve the financing necessary for the Company to develop its mineral properties.

The Company provides no assurance it will be able to compete in any of its business areas effectively with current or future competitors or that the competitive pressures faced by the Company will not have a material adverse effect on the business, financial condition and operating results.



19






Office and Other Facilities

Star Gold Corp. currently maintains its administrative offices at 611 E. Sherman Avenue, Coeur d'Alene, ID 83814.  The telephone number is (208) 664-5066.  In September 2011 the Company relocated its offices, from Post Falls, Idaho, but continues to rent office space from Marlin Property Management, LLC (“Marlin”) which is a single member limited liability company owned by the spouse of Lindsay Gorrill; the Company’s Chairman of the Board.  This office space consists of approximately 400 square feet, and the Company currently leases the space at the monthly rental rate of $2,500.  Star Gold Corp. does not currently own any physical or real property.

Employees

The Company has no employees other than its executive officers and directors as of the date of this Quarterly Report on Form 10-Q.   Star Gold Corp. conducts business largely through agreements with consultants and arm’s length persons.

Research and Development Expenditures

The Company has not incurred any research expenditures since incorporation.

Reports to Security Holders

The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC.  Electronically filed reports may be accessed at www.sec.gov.  Interested parties also may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street NW, Washington, DC  20549.  Information may be obtained on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330.

PLAN OF OPERATION   

The Company maintains a corporate office in Coeur d'Alene, Idaho.  This is the primary administrative office for the company and is utilized by Company Chairman Lindsay Gorrill and Chief Financial Officer Kelly Stopher.  

The Company's plan of operations for the next twelve months, subject to funding, and the availability of contractors, is as follows:

·

Continue the advance exploration and pre-development program for the Longstreet Project.

·

Initiate metallurgical studies to further determine the leachability of the gold/silver mineralization.

·

Continue to work with potential joint venture or capital partners to advance the project into the next phase of exploration and pre-production goals.

·

Update technical resource report to reflect most recent drilling program.

·

Initiate a technical study which focuses on the economic viability of the outlined pit.

Drilling Highlights – Main

The 2013 drilling program was designed to infill drill positions of the Main Zone which were not captured in the calculations of the Technical Report dated December 2012 issued by Agnarian Consultants.  Four (4) holes of the twenty holes drilled during the 2013 drilling program were outside the proposed pit area outlined in the February 2013 Technical Report Highlights.  Highlights of the drilling include:

Highlights of the drilling results can be found on the Star Gold website at http://www.stargoldcorp.com/news/2013-08-28.php .


The plan map can be found at  http://www.stargoldcorp.com/news/LSMain2013DrillingMap.pdf .


The drilling table can be found at http://www.stargoldcorp.com/news/LSMain2013DrillingTable.pdf .


At October 31, 2013, the Company had $1,008,288 cash on hand, and working capital of $1,065,949 with no revenue.  As such, the Company will likely require additional financing at some point in the future in order to meet current obligations and to continue our.  



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Management believes it can source additional capital in the investment markets in the coming months and years, but currently, Star Gold Corp. does not have any financing arrangements in place and there are no assurances that it will be able to obtain sufficient financing on terms acceptable to the Company, if at all.  The Company may also consider other sources of funding, including potential mergers or farm-out a portion of its exploration properties.  

Future liquidity and capital requirements depend on many factors including timing, cost and progress of the Company's exploration efforts.  The Company will consider additional public offerings, private placement, mergers or debt instruments.

Additional financing will be required in the future to complete planned exploration projections and expand operations to the production stage.  The Company is unsure whether additional financing will be available at the time needed or at on acceptable terms, if at all.  If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions, or be forced to cease operations.  Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims.

RESULTS OF OPERATIONS

The Company has earned no revenue from operations in 2013 or 2012 and does not anticipate earning any revenues in the foreseeable future. Star Gold Corp. is an exploration stage company and presently is seeking other business opportunities.

 

Three months ended October 31,

 

Six months ended October 31,

 

2013

 

2012

 

2013

 

2012

REVENUES

$                           -

 

$                           -

 

 

 

 

 

 

 

 

 

 

 

 

Mineral exploration expense

54,955

 

493,528

 

516,296

 

658,975

Legal and professional fees

70,063

 

41,103

 

108,260

 

94,565

Management and administrative

177,575

 

287,666

 

269,053

 

580,203

Depreciation

1,479

 

1,591

 

2,957

 

2,958

Directors fees

                          -

 

3,000

 

750

 

3,000

Other expense (income)

(159)

 

8,122

 

(262)

 

128,057

    Total

$               303,913

 

$               835,010

 

$               897,054

 

$            1,467,758


Total expenses for the three months ended October 31, 2013 of $303,913 decreased $531,097 from total expenses of $835,010 for the comparable period ended October 31, 2012.  Total expenses for the six months ended October 31, 2013 of $897,054 decreased $570,704 from total expenses of $1,467,758 for the comparable period ended October 31, 2012.

 

Three months ended October 31,

 

Six months ended October 31,

SUMMARY OF MINERAL EXPLORATION EXPENSE

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

Drilling and field work

$          2,550

 

$            306,984

 

  $      238,154

 

$            394,189

Geochemical analysis and metallurgy

25,267

 

69,085

 

71,544

 

71,374

Field consultants and payroll

21,271

 

65,589

 

97,208

 

132,260

Technical consultants

5,867

 

23,991

 

82,275

 

24,650

Claims

-

 

27,879

 

27,115

 

36,502

    Total mineral exploration expense

$        54,955

 

$            493,528

 

$        516,296

 

$            658,975

Mineral exploration expense for the three months ended October 31, 2013 was $54,955 a decrease of $438,573 over the three months ended October 31, 2012 expense of $493,528.  The decrease in exploration expense is a result of performing and completing the Company’s primary drilling and exploration program earlier in the year than in the prior comparable period.  



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The Company expects an increase in technical consultants’ expense during the upcoming fiscal quarter ending January 31, 2014 resulting from an updated technical resource report and a scoping study related to the cost-analysis and timeline related to construction of a heap leach pad.


 

Three months ended October 31,

 

Six months ended October 31,

SUMMARY OF LEGAL AND PROFESSIONAL FEES

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

Audit and accounting

$          7,789

 

$              14,551

 

$          35,317

 

$              30,143

Legal fees

6,198

 

15,580

 

14,366

 

46,536

Public company expense

4,958

 

1,240

 

5,963

 

6,815

Investor relations

51,118

 

9,732

 

52,614

 

11,071

    Total legal and professional fees

$        70,063

 

$              41,103

 

$        108,260

 

$              94,565


Legal and professional fees decreased $9,382 for the three months ended October 31, 2013 from the three months ended October 31, 2012.  Audit and accounting fees for the three months ended October 31, 2013, decreased $6,762 compared to the three months ended October 31, 2013.  The Company expects its audit and accounting fees for the subsequent fiscal quarter to remain relatively constant.  Investor relations expense increased $41,386 for the three months ended October 31, 2013 over comparable period ending October 31, 2012, as a result of capital raising activities.   Consequently, the Company closed a private placement during the quarter for $1,100,800 which will be used for ongoing exploration and general corporate purposes.  

 

Three months ended October 31,

 

Six months ended October 31,

SUMMARY OF MANAGEMENT AND ADMINISTRATIVE EPXENSES

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

Auto and travel

$        16,226

 

$              21,782

 

$          21,917

 

$              27,955

General and administrative and insurance

9,563

 

9,210

 

17,553

 

17,049

Management fees and payroll

55,129

 

85,509

 

73,472

 

159,209

Office and computer expense

9,490

 

1,994

 

10,587

 

5,310

Rent and lease expense

7,500

 

7,500

 

15,000

 

15,395

Stock option expense

79,461

 

160,664

 

129,540

 

354,048

Telephone and utilities

206

 

1,007

 

984

 

1,237

    Total management and administrative expenses

$      177,575

 

$            287,666

 

$        269,053

 

$            580,203

Management and administrative expenses for the three months ended October 31, 2013 decreased $110,091 to $177,575 compared to 2012 expense of $287,666, resulting primarily from reduced stock option expense in the current quarter.     

Management fees and payroll of $55,129 for the three months ended October 31, 2013, decreased $30,380 compared to the three months ended October 31, 2012.  The Company anticipates an increase in payroll for the quarter ending January 31, 2014 in order to compensate its President who has foregone compensation for the past year.  

LIQUIDITY AND FINANCIAL CONDITION

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The Company increased total assets to $1,496,799 at October 31, 2013 compared to $1,162,378 at April 30, 2013, primarily as a result of cash expenditures related to exploration activities on the Longstreet Property and the completion, in October 2013, of a private placement of its securities.

Mining Interests (Note 5) increased from $362,999 at April 30, 2013 to $376,999. Prepaid expenses decreased from $68,482 at April 30, 2013 to $11,143 at October 31, 2013 due to deposits required on exploration activities at the Longstreet Property being utilized for exploration activities at the property.  

At October 31, 2013, the Company had working capital of $1,065,949 primarily as a result of a cash balance of $1,008,288.  

The Company utilized $14,000 in cash from Investing Activities on certain annual lease payments on capitalized mineral assets at its Longstreet, Jet and Excalibur projects for the six months ended October 31, 2013 per the terms of Property Option Agreement described in Note 5 of the Financial Statements.  The Company is in compliance with all obligations of the Property Option Agreements.

As of October 31, 2013, the Company had cash of $1,088,288.  Since inception, the sources of the Company’s financing have been through offerings of its equity and debt securities. Star Gold Corp. has not attained profitable operations and its ability to pursue any future plan of operation is likely dependent upon our ability to obtain additional financing in the future.   

Star Gold Corp. anticipates continuing to rely on offerings of its debt and/or equity securities in order to continue to fund business operations. Issuances of additional equity securities will result in dilution to the Company's then existing stockholders. The issuance of additional debt securities will likely result in the reduction of the amount of cash available to the Company to utilize in its ongoing operations and may also result in diluiotion to the Company’s then existing stockholders.  There are no assurances that the Company will be able to complete any additional offerings of its securities or that it will be able arrange for any other type of financing to fund its ongoing business activities.

Disruptions in the credit and financial markets over the past several years have had a material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies.  The prices for gold, silver and other base metals have also recently been subject to fluctuations which have had a material adverse impact on mining related companies’ ability to raise capital.  These disruptions could, among other things, make it more difficult for the Company to obtain, or increase the cost of obtaining, capital and financing for operations.  Access to additional capital may not be available to terms acceptable to the Company or at all.

The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability.  Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company's stock or alternative methods such as mergers or sale of the Company's assets.  No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash.  The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements.  

The Company’s plans for its long term continuation as a going concern include financing future operations through sales of our common stock and/or debt and the eventual profitable exploitation of the Company's mining properties.  These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for an interest in our properties and/or any minerals we may produce in the future.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



23





We do not hold any derivative instruments and do not engage in any hedging activities.


ITEM 4.

CONTROLS AND PROCEDURES.

Conclusions of Management Regarding Effectiveness of Disclosure Controls and Procedures


At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the President and Chief Executive Officer, David Segelov ("President/CEO") and Chief Financial Officer, Kelly J. Stopher ("CFO"), of the effectiveness of the design and operations of the Company's disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act).  Based on that evaluation the President and the CFO have concluded that as of the end of the period covered by the report, the Company's disclosure controls and procedures were adequately designed and effective in ensuring that (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including the Company's President and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosures.


Changes in internal controls over financial reporting


There have been no material changes in internal controls over financial reporting during the quarter ended October 31, 2013.


PART II - OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS

Star Gold Corp. is not a party to any material legal proceedings and, to management’s knowledge, no such proceedings are threatened or contemplated. No director, officer or affiliate of Star Gold Corp. and no owner of record or beneficial owner of more than 5% of our securities or any associate of any such director, officer or security holder is a party adverse to Star Gold Corp. or has a material interest adverse to Star Gold Corp. in reference to pending litigation

ITEM 1A.

RISK FACTORS

There have been no material changes from the risk factors as previously disclosed in our Form 10-K for the year ended April 30, 2013 which was filed with the SEC on July 30, 2013.


ITEM 2.

RECENT SALES OF UNREGISTERED SECURITIES

On October 4, 2013, the Company closed a private placement in which it issued a total of 4,403,200 shares of common stock and warrants to purchase an additional 2,201,600 shares to a total of 14 investors, raising a total of $1,100,800.  The warrants issued entitle the holder thereof to purchase shares of the Company’s common stock for the price of $0.50 per share and expire twelve (12) months after their issuance date.  Shares were issued in reliance on Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4. -

MINE SAFETY DISCLOSURES


Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United



24





States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. The Company is in the exploration stage and has no operations.


ITEM 5.

OTHER INFORMATION.

None

ITEM 6.

EXHIBITS


Exhibit

 

Number

Description of Exhibits

 

 

3.1

Articles of Incorporation.(1)

 

 

3.2

Bylaws, as amended.(1)

 

 

4.1

Form of Share Certificate.(1)

 

 

10.1

Purchase Agreement dated June 22, 2004 between Guy R. Delorme and Star Gold Corp.(1)

 

 

10.2

Declaration of Trust executed by Guy R. Delorme.(1)

 

 

14.1

Code of Ethics. (2)

 

 

31.1

Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32.1

Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101.INS(2)

XBRL Instance

 

 

101.SCH*

XBRL Taxonomy Extension Schema

 

 

101.CAL*

XBRL Taxonomy Extension Calculation

 

 

101.DEF*

XBRL Taxonomy Extension Definition

 

 

101.LAB*

XBRL Taxonomy Extension Labels

 

 

101.PRE*

XBRL Taxonomy Extension Presentation

 

 

(1)

Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on June 14, 2007, as amended.

(2)

Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 February 2, 2012.

(*)

XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.










25





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.

  

  

  

STAR GOLD CORP.

  

  

  

  

  

  

  

  

Date:

December 10, 2013

By:

/s/ David Segelov

  

  

  

President & Chief Executive Officer

  

  

  

(Principal Executive Officer )

  

  

  

 

Date:

December 10, 2013

 

/s/Kelly J. Stopher

 

 

      By:

Kelly J. Stopher

  

  

  

Chief Financial Officer and Secretary

  

  

  

(Principal Financial Officer)






















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