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EXCEL - IDEA: XBRL DOCUMENT - Golden Matrix Group, Inc.Financial_Report.xls
EX-10.29 - EXHIBIT 10.29 - Golden Matrix Group, Inc.sourcesyn7k26_ex10z29.htm
EX-10.25 - EXHIBIT 10.25 - Golden Matrix Group, Inc.sourcepin750022_ex10z25.htm
EX-10.26 - EXHIBIT 10.26 - Golden Matrix Group, Inc.sourcesyn16k23_ex10z26.htm
EX-10.30 - EXHIBIT 10.30 - Golden Matrix Group, Inc.sourcepin750027_ex10z30.htm
EX-31.1 - EXHIBIT 31.1 - Golden Matrix Group, Inc.srglcertamendqa311_ex31z1.htm
EX-10 - EXHIBIT 10.23 - Golden Matrix Group, Inc.sourcesyn176k20_ex10z23.htm
EX-31.2 - EXHIBIT 31.2 - Golden Matrix Group, Inc.srglcertiamendqa312_ex31z2.htm
EX-32 - EXHIBIT 32 - Golden Matrix Group, Inc.srglcertamendedqa32_ex32.htm
EX-10.24 - EXHIBIT 10.24 - Golden Matrix Group, Inc.sourcesyn11k21_ex10z24.htm
EX-10.28 - EXHIBIT 10.28 - Golden Matrix Group, Inc.sourcepin750025_ex10z28.htm



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Amendment No.1

FORM 10-Q/A


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

For the quarterly period ended January 31, 2014


[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______


Commission File Number 000-54840


[srglamendform10qa_10qa001.jpg]

SOURCE GOLD CORP.

(Name of small business issuer in its charter)





Nevada


46-1814729

(State of incorporation)


(I.R.S. Employer Identification No.)


1155 Camino Del Mar #162

Del Mar, CA 92014

(Address of principal executive offices)


(949) 427-0430

 (Registrants telephone number)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]


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.






Large accelerated filer

[  ]

Accelerated filer

[   ]

Non-accelerated filer

[  ] (Do not check if a smaller reporting company)

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 February 25, 2014, there were 177,472,796 shares of the registrants $0.001 par value common stock issued and outstanding.






Explanatory Note


This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the Amendment) amends the Quarterly Report on Form 10-Q of Source Gold Corp. (the Company) for the quarter ended January 31, 2014 (the Original Filing), that was originally filed with the U.S. Securities and Exchange Commission on March 24, 2014. The Amendment is being filed for the purpose of attaching exhibits that were not attached to the original filing. This Amendment to the Form 10-Q for the period ended January 31, 2014, also contains currently dated certifications as Exhibits 31.01, 32.01 and 32.02. Except as described above, the Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way, and speaks as of the date of the Original Filing and does not reflect events occurring subsequent to the original filing date.


SOURCE GOLD CORP.*


TABLE OF CONTENTS





Page

PART I. FINANCIAL INFORMATION





ITEM 1.

FINANCIAL STATEMENTS

3




ITEM 2.

  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    14




ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    17

ITEM 4.

CONTROLS AND PROCEDURES

17







PART II.OTHER INFORMATION





ITEM 1.

LEGAL PROCEEDINGS

18




ITEM 1A.

RISK FACTORS

18




ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

18




ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

18




ITEM 4.

MINE SAFETY DISCLOSURES

18




ITEM 5.

OTHER INFORMATION

18




ITEM 6.

EXHIBITS

18


Special Note Regarding Forward-Looking Statements


Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Source Gold Corp. (the Company), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words may, will, should, expect, anticipate, estimate, believe, intend, or project or the negative of these words or






other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.


*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,"SRGL, "our," "us," the "Company," refers to Source Gold Corp.






PART I - FINANCIAL INFORMATION


ITEM 1.FINANCIAL STATEMENTS










SOURCE GOLD CORP.

(An Exploration Stage Company)


Condensed Consolidated Financial Statements


(Expressed in US dollars)


January 31, 2014 (unaudited)









Financial Statement Index



Consolidated Balance Sheets (2014unaudited)

       4


Consolidated Statements of Operations and Comprehensive Loss (unaudited)                            

       5                                       


Consolidated Statement of Cash Flows (unaudited)                                                        

       6


Notes to the Consolidated Financial Statements (unaudited)

       7


















SOURCE GOLD CORP.

(An Exploration  Stage Company)

Condensed Consolidated Balance Sheets





As of

As of


January 31, 2014

July 31, 2013

ASSETS

 

 




Current assets:

 

 

   Cash and cash equivalents

 $                         53

 $                          14

   Loan receivable

                     15,844

                               -

   Prepaid expenses

                          815

                           815

         Total current assets

                     16,712

                           829

Computer equipment

                          373

                           865

Mineral property

                     85,000

                      85,000

Other assets

                              -

                               -

TOTAL ASSETS

 $                102,085

 $                   86,694




LIABILITIES AND SHAREHOLDERS EQUITY

 

 




Current liabilities:

 

 

Accounts payable and accrued liabilities

 $                  44,403

 $                   38,398

Notes payable, net of discount

                   558,064

                    147,900

Notes payable interest

                     21,653

                        7,973

Notes payable, derivative liability

                   103,716

                    133,962

Due to related party

                     10,820

                      10,820

Loan payable

                              -

                           711

Total Current Liabilities

                   738,657

                    339,765

Shareholder's equity:

 

 

Preferred stock, $0.001 par value; 20,000,000 shares authorized, none outstanding

                              -

                               -

Common stock, $0.001 par value,900,000,000 shares authorized; 162,502,637 (July 31, 2013 - 103,014,399) shares issued and outstanding

                   162,503

                    103,014

Additional paid in capital

              14,375,124

               14,326,942

Accumulated other comprehensive loss

                        (683)

                         (683)

Retained earnings (accumulated deficit)

            (15,173,516)

             (14,682,344)

      Total shareholders' equity

                 (636,572)

                  (253,071)

TOTAL LIABILITIES & STOCKHOLDERS EQUITY

 $                102,085

 $                   86,694



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









SOURCE GOLD CORP.

(An Exploration  Stage Company)

Condensed Consolidated Statements of Operations and Comprehensive Loss









From








Inception








(June 04, 2008


Three months ended


Six months ended


to


January 31,


January 31,


January 31,


2014

2013


2014

2013


2014)

 

 

 

 

 

 

 

 

Sales

 $                  -

 $                -


 $                  -

 $                -


 $                    -

Cost of goods sold

                     -

                   -

 

                     -

                   -

 

                       -

Gross profit

                     -

                   -


                     -

                   -


                       -

Operating expenses

 

 

 

 

 

 

 

   Accounting and audit fees

             4,800

         10,505


             5,675

         23,655


           221,017

   Depreciation

                246

              246

 

                492

              492

 

               1,600

   G&A expenses

         124,458

              400


         142,401

           4,030


           300,122

Management fees

           52,500

         18,000

 

           90,000

         36,000

 

      11,302,220

   Mineral property exploration costs

                     -

                   -


                     -

           3,317


           159,263

   Mineral property option impairment

                     -

                   -

 

                     -

                   -

 

        2,203,611

Professional fees

           94,435

           2,095


           95,235

         18,799


           359,639

Tax penalties and interest

                     -

                   -

 

                     -

                   -

 

             80,347

   Other operating expenses

                     -

                   -


                     -

                   -


                       -

Net loss from operations

       (276,439)

       (31,246)

 

       (333,803)

       (86,293)

 

    (14,627,819)

Other income/ (expense)








  Foreign exchange (gain) loss

                     -

                   -

 

                     -

                   -

 

             (9,163)

  FV change of derivative liability

         (38,609)

                   -


         (27,035)

                   -


           (46,243)

  Interest on convertible notes

         (41,957)

         (2,011)

 

       (130,334)

         (3,818)

 

         (319,404)

  Convertible debt discount

                     -

       (80,299)


                     -

     (112,428)


         (170,886)

Net loss before income taxes

       (357,005)

     (113,556)

 

       (491,172)

     (202,539)

 

    (15,173,516)

  Income tax expense

                     -

                   -


                     -

                   -


                       -

Net Loss

       (357,005)

     (113,556)

 

       (491,172)

     (202,539)

 

    (15,173,516)

Other comprehensive gain (loss)







                       -

  Foreign currency translation adjustments

                     -

                   -

 

                     -

            (148)

 

                (683)

Comprehensive Loss

       (357,005)

     (113,556)


       (491,172)

     (202,687)


    (15,174,199)

 

 

 

 

 

 

 


Per share information








Basic, weighted number of common shares outstanding

  101,907,152

  63,148,271

 

  124,309,495

  59,404,006

 


Net profit/(loss) per common share

             (0.00)

           (0.00)


             (0.00)

           (0.00)






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






SOURCE GOLD CORP.

 

(An Exploration Stage Company)

 

Condensed Consolidated Statements of Cash Flows

 





From





Inception


Six months ended


(June 4, 2008


January 31,


to


2014

2013

 

January 31, 2014)

Cash flows from operating activities

 

 

 

 

Net loss

   (491,172)

   (202,539)


         (15,173,516)

Adjustment to reconcile net loss to net cash in operating activities

 

 

 

 

     Fair value change of derivative liability

       27,035

                 -


                 46,243

     Convertible debt interest expense

         8,600

     112,428

 

               282,507

  Beneficial conversion feature of convertible notes

     108,054

                 -


               186,130

  Depreciation

            492

            492

 

                   1,600

  Mineral property option costs

                 -

                 -


                   1,842

  Impairment loss on mineral property option

                 -

                 -

 

            2,199,894

  Management fees from stock options

                 -

                 -


          10,960,000

Changes in assets and liabilities:



 


(Increase) decrease in loans receivable

     (15,844)

                 -


                (15,844)

(Increase) decrease in prepaid expenses

                 -

          (675)

 

                     (815)

(Decrease) increase in accrued interest

                 -

         3,818


                   2,165

(Decrease) increase in accounts payable and accrued liabilities

         6,005

         4,788

 

                 42,238

(Decrease) increase in notes payable, interest

       13,680

                 -


                 21,653

Net cash used in operating activities

   (343,150)

     (81,688)

 

           (1,445,902)






Cash flows from investing activities

 

 

 

 

Purchase of computer equipment  

                 -

                 -


                  (1,973)

Mineral property option acquisition

                 -

                 -

 

              (204,894)

Net cash flows used in investing activities

                 -

                 -

 

              (206,867)

 

 

 

 

 

Cash flows from financing activities





Payments from promissory notes

     343,900

       66,274

 

               690,310

Due to related party

                 -

         1,533


                 10,820

Proceeds from loan payable

          (711)

       (1,289)

 

                           -

Proceed from issuance of common stock

                 -

                 -


               952,375

Net cash provided by financing activities

     343,189

       66,518

 

            1,653,505






Effect of foreign exchange on cash

                 -

          (148)

 

                     (683)






Change in cash and cash equivalents

              39

     (15,318)

 

                        53

Cash and cash equivalents at the beginning of the period

              14

       15,620


                           -

Cash and cash equivalents at the end of the period

              53

            302

 

                        53






Supplementary disclosure for non-cash investing and financing activities

 

 

 

Shares issued for mineral property

 $              -

 $              -

 

 $         2,080,000



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






Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)


Note 1

Basis of Presentation


The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for financial information and with the instructions to Form 10-Q of Regulation S-K. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended July 31, 2013 included in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the six months ended January 31, 2014 are not necessarily indicative of the results that may be expected for the year ending July 31, 2014.


The condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are presented in United States dollars.  


These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., (IRC) a company incorporated in Alberta, Canada on August 1, 2008; Northern Bonanza Inc, (NBI) a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, (SB) a Limited Liability Company incorporated in Nevada, USA on June 18, 2010; and Vulture Gold LLC (Vulture), a Nevada Limited Liability Company which was acquired on August 7, 2010.


All significant inter-company transactions and balances have been eliminated.


Note 2

Nature of Operations and Going Concern


The Company was incorporated in the state of Nevada, United States of America on June 4, 2008.  The Company is an exploration stage company and was formed for the purpose of acquiring exploration and development stage mineral properties.  The Companys year-end is July 31. On August 31, 2009, the Company changed its name to Source Gold Corp. in order to reflect the current focus of the Corporation.


On January 24, 2013, the Company increased the number of authorized common shares of the Company from 180,000,000 to 900,000,000 shares.


During the year ended July 31, 2009, the Company acquired via its subsidiary company IRC Exploration Ltd. (IRC), a mineral claim located in British Columbia, Canada. During the year ended July 31, 2010, the mineral property option agreement for the claim in British Columbia was abandoned.


During the year ended July 31, 2010, the Company acquired two additional mineral properties located in Ontario, Canada.  The Company also incorporated two new subsidiary companies, Northern Bonanza Inc. (NBI) to hold its mineral properties located in Ontario, Canada, and Source Bonanza LLC (SB) to hold its mineral properties located in the USA.  The Company also transferred its Ontario mineral properties to NBI during the year ended July 31, 2010.





Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)


Note 2

Natures of Operations and Going Concern - (Contd)


On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, (Vulture) a Nevada Limited Liability Company.  (Note 8c)


On March 28, 2012, the Company entered into a property option agreement to acquire a 100% undivided right in three tenures comprising 2,785 acres in northern British Columbia, Canada. (Note 8d)


The Company intends on exploring its mineral properties and has not yet determined the existence of economically recoverable reserves.  The recoverability of amounts incurred on its mineral properties is dependent upon the existence of economically recoverable reserves in the property, confirmation of the Companys interest in the underlying mineral claims, the ability of the Company to obtain the necessary financing to complete their development, and the attainment and maintenance of future profitable production or disposition thereof.


These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.


The Company has yet to achieve profitable operations, has accumulated losses of $15,173,516 since inception, has working capital deficiency of $721,945, has no source of recurring revenues, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Companys ability to continue as a going concern.  The Companys ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.


Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.


Note 3

Summary of Significant Accounting Policies


The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates.


Principles of Consolidation


These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., (IRC) a company incorporated in Alberta, Canada on





August 1, 2008; Northern Bonanza Inc., (NBI) a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, (SB) a Limited Liability Company incorporated in Nevada, USA on June 18, 2010 and Vulture Gold LLC, (Vulture) a Nevada Limited Liability Company which was acquired on August 7, 2010.


All significant inter-company transactions and balances have been eliminated.


Cash and Cash Equivalents


For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.


Exploration Stage Company


The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered an exploration stage company.  All losses accumulated since inception have been considered as part of the Companys exploration stage activities.


Mineral Properties


The Company is primarily engaged in the acquisition, exploration, and development of mineral properties.


Mineral property acquisition costs are capitalized in accordance with FASB ASC 930-805, Extractive Activities-Mining, when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures.  Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met.  In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.


When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.


Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis.


Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards.  Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.


To date the Company has not established any proven or probable reserves on its mineral properties.














Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)


Note 4

Computer equipment



January 31,


July 31,


2014


2013

Cost

 

 

 

Computer equipment

 $                 1,973


 $                  1,973

 

 

 

 

Accumulated depreciation

                  (1,600)


                   (1,108)

 

 

 

 

Net book value

 $                    373

 

 $                     865



Note 5

Financial Instruments


Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.


The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.


The fair value hierarchy for valuation inputs prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.  Each fair value measurement is reported in one of three levels; the level is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:


Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.


Level 2 - inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


Level 3 - inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.


The carrying value of the Companys financial assets and liabilities which consist of cash, and accounts payable and accrued liabilities, in managements opinion approximate their fair value due to the short maturity of such instruments.  These financial assets and liabilities are valued using level 3 inputs, exceptfor cash which is at level 1.  Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.







Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 6

Related Party Transactions


All related party transactions have been recorded at the exchange value which was the amount of consideration established and agreed to by the related parties.


As of January 31, 2014, due to related party includes $10,820(January 31, 2013 - $4,962) owing to Grid Petroleum.


During the year ended July 31, 2010, the former president of the Company granted an option to the current president of the Company to acquire up to 20,000,000 common shares of the Company as detailed in Note 7, common stock.


On November 1, 2009, the Company entered into a Corporate Management Services Agreement with the President of the Company for management services.  Pursuant to the agreement the President would receive a signing bonus of $7,500 (paid November 1, 2009) and $5,000 per month beginning December 1, 2009 for services rendered plus reimbursement of the Companys expenses.  The agreement may be terminated by either party upon 30 days written notice.


On June 21, 2011, the Company amended the agreement by issuing a resolution to reflect a payment of $6,000 per month for services rendered.


On October 31, 2012, the Former President of the Company acquired 10,000,000 common shares of the Company in a private transaction.  As of October 31, 2012 the President holds 16.4% interest in the common stock of the Company.


During the six month period ended January 31, 2014, the Company recorded management fees of $nil (six month period ended January 31, 2013 - $36,000) owed to the Companys former president.


On May 15, 2013 the Company entered into an employment agreement with Dhugald Pinchin providing a signing bonus equivalent to $50,000 USD or stock and $7,500 per month salary.


During the six month period ended January 31, 2014, the Company recorded management fees of $45,000 (six month period ended January 31, 2013 - $nil) owed to the Companys president.


Note 7

Convertible Notes Payable






January 31,


July 31,




2014


2013

Promissory Note #2

 

           30,000

 

         30,000

Promissory Note #4


             2,410


         24,900

Promissory Note #5

 

           12,000

 

         12,000

Promissory Note #6


           11,774


         11,774

Promissory Note #7

 

           41,250

 

         27,500

Promissory Note #8


           44,978


         44,978

Promissory Note #9

 

           11,000

 

         11,000

Promissory Note #10


           11,000


         11,000

Promissory Note #11

 

           57,500

 

         57,500

Promissory Note #12


             7,500


           7,500

Promissory Note #13

 

             7,500

 

           7,500

Promissory Note #14


           11,000


                   -

Promissory Note #15

 

             7,500

 

                   -

Promissory Note #16


           11,000


                   -

Promissory Note #17

 

             7,500

 

                   -

Promissory Note #18


           11,000


                   -

Promissory Note #19

 

             7,500

 

                   -

Promissory Note #20


         176,000


                   -

Promissory Note #21

 

           11,000

 

                   -

Promissory Note #22


             7,500


                   -

Promissory Note #23

 

           16,000

 

                   -

Promissory Note #24


           37,500


                   -

Promissory Note #25

 

             7,500

 

                   -

Promissory Note #26


             7,000


                   -

Promissory Note #27

 

             7,500

 

                   -




 $      562,412


 $    245,652

 

Debt discount

 

                     -

 

         (8,600)


Debt discount - BCF


           (4,348)


       (89,152)

Notes payable, net of discount

 

         558,064

 

       147,900


Accrued interest


           21,653


           7,973

 

 

 

 $      579,718

 

 $    155,873



Promissory Note #2

On March 19, 2012, the Company received $30,000 cash from the issuance of a convertible promissory note in the amount of $30,000.  The promissory note is unsecured, interest free and repayable upon demand.

The note may be converted at the option of the holder into Common stock of the Company.  The fixed conversion price is $0.01 per share.  Accordingly the note may be converted into 3,000,000 common shares of the Company.

The Company determined that this Promissory note should be accounted for in accordance with FASB ASC 470-20 which addresses Accounting for Convertible Securities with Beneficial Conversion Features".  The beneficial conversion feature is calculated at its intrinsic value (that is, the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (per share being $0.08), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.

Promissory Note #4

On October 5, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $42,500.    The promissory note is unsecured, bears interest at 8% per annum, and matures on July 10, 2013.  During the six month period ended January 31, 2014 the Company accrued $476 (six month period ended January 31, 2013 - $1,099) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.





Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #4 (Contd)

On April 4, 2013, the Company recorded an initial derivative liability of $79,440 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.


During the six month period ended January 31, 2014, the Company recorded a loss of $15,009 (January 31, 2013 - $nil) due to the change in value of the derivative liability during the period.

During the six month period ended January 31, 2014, the Company issued 59,488,238 common shares upon the conversion of $27,140 of the principal balance into common stock, and $57,281 of the derivative liability was re-classified as additional paid in capital upon conversion.


On November 14, 2013, the Company was charged a late filing penalty and $4,650 was credited to the principal balance with a corresponding debit to the statement of operations.

As of January 31, 2014, principal balance of $2,410 (January 31, 2013 - $nil) accrued interest of $3,099 (January 31, 2013 - $1,099) and a derivative liability of $3,532 (January 31, 2013 - $nil) was recorded.


Promissory Note #5


On October 30, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $12,000. The promissory note is unsecured; bears interest at 8% per annum, and matured on April 30, 2013.  During the six month period ended January 31, 2014, the Company accrued $484 (January 31, 2013 - $242) in interest expense.


After 180 days from issuance, the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.


On April 29, 2013, the Company recorded an initial derivative liability of $13,844 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.


During the six month period ended January 31, 2014, the Company recorded a loss of $4,482 (January 31, 2013 - $nil) due to the change in value of the derivative liability during the period.


As of January 31, 2014, principal balance of $12,000 (January 31, 2013 - $12,000) accrued interest of $1,205 (January 31, 2013 - $nil) and a derivative liability of $23,447 (January 31, 2013 - $nil) was recorded.

Promissory Note #6


On December 18, 2012, the Company converted a loan payable of $11,774 to a convertible promissory note.  The promissory note is unsecured, bears interest at 8% per annum, and matures on June 18,





2013. During the six month period ended January 31, 2014, the Company accrued $474 (January 31, 2013 - $114) in interest expense.


After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.


On June 17, 2013, the Company recorded an initial derivative liability of $19,145 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.


During the six month period ended January 31, 2014, the Company recorded a loss of $4,397 (January 31, 2013 - $nil) due to the change in value of the derivative liability during the period.


As of January 31, 2014, principal balance of $11,774 (January 31, 2013 - $11,774) accrued interest of $1,055 (January 31, 2013 - $113) and a derivative liability of $23,004 (January 31, 2013 - $nil) was recorded.


Promissory Note #7


On January 23, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $27,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 25, 2013.  During the six months ended January 31, 2014, the Company accrued $1,345 (January 31, 2013 - $nil) in interest expense.


After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.


On July 23, 2013, the Company recorded an initial derivative liability of $48,150 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.


During the six month period ended January 31, 2014, the Company recorded a loss of $3,147 (January 31, 2013 - $nil) due to the change in value of the derivative liability during the period.


On November 14, 2013, the Company was charged a late filing penalty and $13,750 was credited to the principal balance with a corresponding debit to the statement of operations.


As of January 31, 2014, principal balance of $41,250 (January 31, 2013 - $nil) accrued interest of $2,484 (January 31, 2013 - $nil) and a derivative liability of $53,733 (January 31, 2013 - $nil) was recorded.


Promissory Note #8

On May 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $44,978.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $1,814 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.





Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #8 (Contd)


As of January 31, 2014, principal balance of $44,978 (January 31, 2013 - $nil) and accrued interest of $2,711 (January 31, 2013 - $nil) was recorded.


Promissory Note #9


On June 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $444 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $589 (January 31, 2013 - $nil) was recorded.


Promissory Note #10


On July 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on January 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $444 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $516 (January 31, 2013 - $nil) was recorded.


Promissory Note #11


On May 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $57,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 30, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $2,318 (January 31, 2013 - $nil) in interest expense.





Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #11 (Contd)


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


As of January 31, 2014, principal balance of $57,500 (January 31, 2013 - $nil) and accrued interest of $3,087 (January 31, 2013 - $nil) was recorded.


Promissory Note #12


On June 30, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on December 31, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $353 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $353 (January 31, 2013 - $nil) was recorded.


Promissory Note #13


On July 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on January 31, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $302 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $302 (January 31, 2013 - $nil) was recorded.









Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #14


On August 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $441 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $7,700 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $441 (January 31, 2013 - $nil) was recorded.


Promissory Note #15


On August 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 3, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $251 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $2,250 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $251 (January 31, 2013 - $nil) was recorded.


Promissory Note #16


On September 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of





Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $367 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $3,300 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $367 (January 31, 2013 - $nil) was recorded.


Promissory Note #17


On September 30, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 31, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $202 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $3,750 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $202 (January 31, 2013 - $nil) was recorded.


Promissory Note #18


On October 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $294 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $5,500 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.







Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #18 (Contd)


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $294 (January 31, 2013 - $nil) was recorded.


Promissory Note #19


On October 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on April 30, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $151 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $750 (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $151 (January 31, 2013 - $nil) was recorded.


Promissory Note #20


On November 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $176,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $3,510 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $176,000 (January 31, 2013 - $nil) and accrued interest of $3,510 (January 31, 2013 - $nil) was recorded.






Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 7

Convertible Notes Payable (Contd)


Promissory Note #21


On November 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $219 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $11,000 (January 31, 2013 - $nil) and accrued interest of $219 (January 31, 2013 - $nil) was recorded.


Promissory Note #22


On November 30, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on May 30, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $102 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $102 (January 31, 2013 - $nil) was recorded.


Promissory Note #23


On December 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of





Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $214 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $16,000 (January 31, 2013 - $nil) and accrued interest of $214 (January 31, 2013 - $nil) was recorded.


Promissory Note #24


On December 13, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $37,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 17, 2014.  During the six months ended January 31, 2014, the Company accrued $403 (January 31, 2013 - $nil) in interest expense.


After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.


As of January 31, 2014, principal balance of $37,500 (January 31, 2013 - $nil) and accrued interest of $403 (January 31, 2013 - $nil) was recorded.


Promissory Note #25


On December 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on June 30, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $51 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $51 (January 31, 2013 - $nil) was recorded.


Promissory Note #26


On January 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $7,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures





on July 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $46 (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,000 (January 31, 2013 - $nil) and accrued interest of $46 (January 31, 2013 - $nil) was recorded.


Promissory Note #27


On January 31, 2014 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on July 31, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the six month period ended January 31, 2014, the Company accrued $nil (January 31, 2013 - $nil) in interest expense.


A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.


During the six month period ended January 31, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (January 31, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.


As of January 31, 2014, principal balance of $7,500 (January 31, 2013 - $nil) and accrued interest of $nil (January 31, 2013 - $nil) was recorded.


Note 8

Derivative Liabilities

 

The Company issued financial instruments in the form of convertible notes with embedded conversion features.  The convertible notes payable have conversion rates which are indexed to the market value of the Companys common stock price.


During the six month period ended January 31, 2014, the Company has a balance of derivative liabilities for embedded conversion features related to convertible notes payable of face value $103,716 (January 31, 2013- $66,846).  During the six month period ending January 31, 2014, $27,100 (January 31, 2013 - $nil) of convertible notes payable were converted into common stock of the Company.


These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP. The valuation assumptions are classified within Level 1 inputs and Level 2 inputs.


The following table represents the Companys derivative liability activity for the embedded conversion features discussed above:







Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 8

Derivative Liabilities (Contd)




January 31,



2014

Balance, beginning of year

 

 $        133,962

Initial recognition of derivative liability


                       -

Fair value change in derivative liability

 

             27,035

Conversion of derivative liability to APIC


            (57,281)

Balance as of January 31, 2014

 

 $        103,716



Note 9   Common Stock


The Company is authorized to issue 20,000,000 shares of it $0.001 par value preferred stock and 900,000,000 shares of its $0.001 par value common stock.


During the six month period ended January 31, 2014, the Company issued 59,488,238common shares upon the conversion of $27,140 principal of a promissory note into common stock.


Warrants and Options


As of January 31, 2014 and July 31, 2013, there were no warrants or options outstanding to acquire any additional shares of the Companys common stock.


Note 10     Mineral Properties


a)  On October 26, 2009, the Company entered into a property option agreement whereby the Company was granted an option to earn up to a 50% interest in 19 mineral claims (the KRK West claims) located in the Thunder Bay Mining Division of Ontario.  The option agreement is denominated in Canadian dollars.  


Consideration for the option was the issuance of 2,000,000 common shares of the Company, cash payments totaling $103,718 (CDN$110,000), and aggregate exploration expenditures of $969,268 (CDN$1,000,000) as follows:


i)

Cash payments:


*

$46,640 (CDN$50,000) upon execution of the Option agreement (paid);

*

$57,078(CDN$60,000) on or before December 1, 2009 (paid)


ii)

Exploration expenditures of $484,768 (CDN$500,000) on or before December 31, 2010, and $969,268 (CDN$1,000,000) in aggregate on or before December 31, 2011.


In aggregate to July 31, 2011, the Company incurred exploration expenditures aggregating $32,080 (CDN$32,836) (See below regarding status of the agreement)


iii)

The issuance of 2,000,000 common shares (none issued) to the shareholders of the optionor, as directed by the optionor.





Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 10

Mineral Properties (Contd)


Upon earning its 50% interest in the option, the Company was to enter into a joint venture agreement to develop and operate the property.


Pursuant to the agreement, if commercial production had been achieved and the Company sold or otherwise disposed of metals and minerals that had been produced and removed from the KRK West properties, the Company would pay Thunder Bay a 3% Net Smelter Return royalty.


In the event the Company sold or caused the sale of products other than to a smelter or refinery or otherwise caused the removal of products from the Property, the Company would pay a 2% Net Smelter Return Royalty. Alternatively, the Company could buy back the royalty right for $1,000,000 for each breccia pipe that reached commercial production.


The property option agreement was stated in Canadian dollars.  The US dollar equivalent was converted using the foreign exchange rate at July 31, 2010 for all future commitments.


During the year ended July 31, 2010, the Company learned that the optionor had allowed the underlying claims to lapse, and therefore the option agreement was null and void.


The Company, and a director of the Company (The Company subsequently purchased these claims from the director), purchased the claims from persons who re-staked the claims for an aggregate amount of $27,577.  Subsequent to acquisition, the claims were transferred to the Companys wholly owned subsidiary, Northern Bonanza Inc.  Due to the lapse of the underlying claims the Company impaired a total of $131,295 of acquisition costs incurred as of July 31, 2010 made up of the initial $103,718 payment and the additional payment of $27,577.


The original optionor represents that control of the claims remains with the optionor and that the Company has no right to further explore the property.  The Company disagrees with this assertion and accordingly, ownership to the claims is in dispute.  On January 6, 2011 the Ministry of Northern Development, Mines and Forestry, Canada, was to adjudicate upon the ownership of the claims.  The hearing did not occur as the other party filed for a change of venue.  A determination regarding the change of venue has not yet been made and a date for rendering the decision has not yet been established.  Mediation regarding the matter was deferred until late 2011 and prior to the hearing the optionor cancelled the mediation.  


In October 2011, the Company, as a result of the cancellation of the mediation hearing with William J. Wheeler regarding the Thunder Bay claims, decided the best course of action was to file suit.  Accordingly, a suit was filed against Thunder Bay and Wheeler in Ontario Superior Court of Justice. In the suit we detail the breach of the Agreement by Thunder Bay and Wheeler and request:


*

An order transferring an application regarding mining claims pending before the Office of the Mining and Lands Commissioner to the  Ontario Superior Court of Justice to be consolidated with this action;

*

A declaration regarding our ownership and Thunder Bay and Wheelers ownership with respect to certain mining claims; and

*

$1,200,000 in damages from Thunder Bay and Wheeler.







Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 10

Mineral Properties (Contd)



b) During the year ended July 31, 2010, the Company entered into a property purchase agreement, which was formalized on May 4, 2010, to acquire a 100% interest in 21 mining claims located in the Northern Ontario for $50,767 (Cdn$51,800).  During the year ended July 31, 2010, the Company incurred an additional $17,741 in staking costs in relation to these claims.  Subsequent to acquisition the claims and exploration costs were transferred to NBI at cost.


During the year ended July 31, 2010, the Company made exploration advances to the operator amounting to $47,806.  As of July 31, 2010 the operator had incurred exploration expenses aggregating $20,118 resulting in net advances held being $26,968.  During the year ended July 31, 2011, the Company made further advances to the operator of $7,040.  


During the year ended July 31, 2011 the operator incurred exploration expenditures of $34,008 and the Company also incurred direct exploration expenditures of $47,335.


As of July 31, 2013, the operator held exploration advances amounting to $nil (2012 - $nil). Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs incurred of $68,599 for these mineral properties was deemed to be fully impaired as of July 31, 2011.


c) On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, (Vulture) a Nevada limited Liability Company.  Vulture holds 27 mineral claims in Maricopa County, Arizona, known as the Vulture Mine.  As consideration for the acquisition the Company issued 4,000,000 common shares with a fair value of $2,000,000.


This transaction has been recorded as an asset acquisition and the fair value paid has been allocated to the cost of acquisition of the mineral property.


Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs of $2,000,000 incurred for these mineral properties is deemed to be fully impaired.


During the six month period ended January 31, 2014, the Company incurred exploration expenditures of $nil (January 31, 2013 - $3,317) on the property.


d) On March 28, 2012, the Company entered into a property option agreement whereby the Company was granted an option to earn a 100% interest in 3 mineral tenures located in Northern British Columbia.  The option agreement is denominated in US dollars.  


Consideration for the option was the issuance of 1,000,000 common shares of the Company on March 28, 2012 valued at $80,000, (issued) and cash payment of $5,000 by April 2, 2012 (paid) and aggregate exploration expenditures of $25,000 by September 15, 2013.


As at January 31, 2014, no exploration expenditures have been incurred on the property.








Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)



Note 11   

Income Taxes


The Company had no income tax expense during the reported period due to net operating losses.

A reconciliation of income tax expense to the amount computed at the statutory rates is as follows:





2014


2013

Operating loss for the six month period ended January 31

 $      (491,172)

 

 $    (202,539)

Average statutory tax rate

34%


34%

Expected income tax provisions

 $      (166,998)

 

 $      (68,863)

Unrecognized tax loses

         (166,998)


         (68,863)

Income tax expense

 $                   -

 

 $                  -



The Company has net operating losses carried forward of approximately $15,173,516 for tax purposes whichmay be recognized in future periods, not to exceed 20 years.



Note 12  

Commitments


The Company has an ongoing agreement with a director of the company to provide management services for $7,500 per month.  Either party may terminate the agreement with one months written notice.


Note 13  Subsequent events


On February 4, 2014, a holder of a convertible note converted a total of $2,005 of principal into 7,711,538 shares of our common stock at a price of $0.00026.

On February 18, 2014, a holder of a convertible note converted a total of $2,105 of principal and interest into 7,258,621 shares of our common stock at a price of $0.00029.













ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION


FORWARD-LOOKING STATEMENTS


This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.



RESULTS OF OPERATIONS


Working Capital






January 31, 2014

$

July 31, 2013

$

Current Assets

16,712

829

Current Liabilities

738,657

339,765

Working Capital (Deficit)

(721,945)

(338,936)


Cash Flows

Six Months Ended





January 31, 2014

$

January 31, 2013

$

Cash Flows from (used in) Operating Activities

(343,150)

(81,688)

Cash Flows from (used in) Investing  Activities

-

-

Cash Flows from (used in) Financing  Activities

343,189

66,518

Net Increase (decrease) in Cash During Period

39

(15,318)




 


Results for the Six Months Ended January 31, 2014 Compared to the Six Months Ended January 31, 2013


Operating Revenues


The Companys revenues for the six months ended January 31, 2014 and January 31, 2013 were $nil and $nil, respectively.  We do not anticipate earning additional revenues until such time that we enter into commercial production of our claims.  We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources, or if such resources are discovered, that we will enter into commercial production.

Cost of Revenues

The Companys cost of revenues for the six months ended January 31, 2014 and January 31, 2013 were $nil and $nil, respectively.






General and Administrative Expenses


General and administrative expenses for the six months ended January 31, 2014 and January 31, 2013 were $333,803 and $86,293, respectively.  General and administrative expenses consisted primarily of consulting fees, management fees, legal fees and accounting and audit fees.  The increase was primarily attributable to an increase in Management fees for normal operations.


Net Loss


Net loss for the six months ended January 31, 2014 was $(491,172) compared with a net loss of $(202,539) for the six months ended January 31, 2013.  The increased net loss is due to an increase in G&A expenses and interest on convertible notes.


Results for the Period from June 4, 2008 (inception of exploration state) Through January 31, 2014


Operating Revenues


The Companys revenues for the period from June 4, 2008 (inception of exploration state) through January 31, 2014 were $nil.


Cost of Revenues


The Companys cost of revenues for the period from June 4, 2008 (inception of exploration state) through January 31, 2014 were $nil.


General and Administrative Expenses


General and administrative expenses for the period from June 4, 2008 (inception of exploration state) through January 31, 2014 were $14,627,819.  General and administrative expenses consist primarily of consulting fees, officer compensation, management fees, legal fees, office expenses, and professional fees appropriate for being a public company.


Net Loss


Net loss for the period from June 4, 2008 (inception of exploration state) through January 31, 2014 was $(15,173,516).


Liquidity and Capital Resources


As at January 31, 2014, the Company had a cash balance and total assets of $53 and $102,085, respectively, compared with $829 and $86,694 of cash and total assets, respectively, as of July 31, 2013. The decrease in cash was due to normal operating activities and the decrease in total assets was due to the use of cash for operations.


As at January 31, 2014, the Company had total liabilities of $738,657 compared with $339,765 as of July 31, 2013. The increase in total liabilities was attributed to the issuance of a notes payable, derivative liabilities and an increase in accounts payable and accrued liabilities.


The overall working capital deficit increased from $338,936 at July 31, 2013 to $721,945 at January 31, 2014.


Cashflows from Operating Activities


During the six months ended January 31, 2014, cash used in operating activities was $(343,150) compared to $(81,688) for the six months ended January 31, 2013.  The decrease in the amounts of cash used for operating activities was primarily due to the noncash expenses relating to the discount and interest on convertible notes.






Cashflows from Investing Activities


During the six months ended January 31, 2014 cash used in investing activities was $nil compared to $nil for the Six months ended January 31, 2013.


Cashflows from Financing Activities


During the six months ended January 31, 2014, cash provided by financing activities was $343,189 compared to $66,518 for the six months ended January 31, 2013.  


Quarterly Developments


None


Subsequent Developments


None


Going Concern


We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited 2012 financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.


Future Financings


We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.


Off-Balance Sheet Arrangements


We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.


Critical Accounting Policies


Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.


We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.









Recently Issued Accounting Pronouncements


The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of January 31, 2014, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on December 4, 2013, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


On October 26, 2009, we entered into an agreement with Thunder Bay Minerals, Inc. (the Agreement and Thunder Bay, respectively) under which we were granted an option to acquire an undivided 50% interest in 19 mineral claims known as the KRK West Claim, located north of Thunder Bay, Ontario, Canada. During the year ended July 31, 2010, we learned that Thunder Bay had allowed the KRK West Claims to lapse, and therefore the option agreement was null and void. As discussed above, we were able to re-purchase 13 of the 19 KRK West Claims from persons who re-staked the claims for an aggregate amount of $27,578. We also incurred exploration





expenditures of $555 in relation to these claims. Subsequent to acquisition of the claims they were transferred to our wholly owned subsidiary, Northern Bonanza, Inc.


Thunder Bay currently maintains that control of the KRK West Claims remains with it and that we have no right to further explore the property. We disagree with this assertion and accordingly ownership to the claims is in dispute.


On January 6, 2011, the Ministry of Northern Development, Mines and Forestry, Canada, was to adjudicate upon the ownership of the claims. The hearing did not occur as the other party filed for a change of venue and mediation regarding the matter was scheduled. Two days prior to the scheduled mediation, William J. Wheeler (Wheeler), the principal of Thunder Bay, cancelled the mediation.


As a result of the cancellation, we decided the best course of action was to file suit. Accordingly, we filed an action against Thunder Bay and Wheeler in Ontario Superior Court of Justice. In the suit we detail the breach of the Agreement by Thunder Bay and Wheeler and request:


·

An order transferring an application regarding mining claims to Ontario Superior Court to be consolidated with this action;

·

A declaration regarding our ownership and Thunder Bay and Wheelers ownership with respect to certain mining claims; and

·

$1,200,000 in damages from Thunder Bay and Wheeler.


The Company entered into a formal settlement agreement with a vendor to settle an amount due of Cdn$34,000 by monthly installments of Cdn$5,000 commencing May 15, 2011. As of January 31, 2014, Cdn$30,000 of the total amount due has been paid.


Other than the foregoing we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.


ITEM 1A. RISK FACTORS


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


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


1.Quarterly Issuances:


On August 9, 2013, the holder of a convertible note converted $3,000 of principal and interest into 4,545,455 shares of its common stock at a price of $0.00066.


On August 29, 2013, the holder of a convertible note converted $3,200 of principal and interest into 5,245,902 shares of its common stock at a price of $0.00061.


On September 9, 2013, the holder of a convertible note converted a total of $3,100 of principal and interest into 5,254,237 shares of its common stock at a price of $0.00059.


On September 16, 2013, the holder of a convertible note converted $3,200 of principal and interest into 5,245,902 shares of its common stock at a price of $0.00061.


On October 21, 2013, the holder of a convertible note converted $3,100 of principal and interest into 5,254,237 shares of its common stock at a price of $0.00059.






On December 5, 2013, the holder of a convertible note converted $2,830 of principal and interest into 6,152,174 shares of its common stock at a price of $0.00046.


On December 19, 2013, the holder of a convertible note converted $2,750 of principal and interest into 6,707,317 shares of its common stock at a price of $0.00041.


On January 6, 2014, the holder of a convertible note converted $1,940 of principal and interest into 6,689,655 shares of its common stock at a price of $0.00029.


On January 9, 2014, the holder of a convertible note converted $1,940 of principal and interest into 6,689,655 shares of its common stock at a price of $0.00029.


On January 17, 2014, the holder of a convertible note converted $2,080 of principal and interest into 7,703,704 shares of its common stock at a price of $0.00027.


2. Subsequent Issuances:


On February 4, 2014, a holder of a convertible note converted a total of $2,005 of principal into 7,711,538 shares of our common stock at a price of $0.00026.

On February 18, 2014, a holder of a convertible note converted a total of $2,105 of principal and interest into 7,258,621 shares of our common stock at a price of $0.00029.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. MINE SAFETY DISCLOSURES


None.



ITEM 5. OTHER INFORMATION


On August 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital, LLC. Under the terms of the promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8%, with a February 1, 2014 maturity date. This note also contains customary events of default.

             On August 31, 2013, the Company entered into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of March 3, 2014. This note also contains customary events of default.


On September 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a March 1, 2014 maturity date. This note also contains customary events of default.

             On September 30, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of March 31, 2014. This note also contains customary events of default.






On October 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a April 1, 2014 maturity date. This note also contains customary events of default.


On October 31, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of April 30, 2014. This note also contains customary events of default.


On November 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $176,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a March 1, 2014 maturity date. This note also contains customary events of default.


On November 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a May 1, 2014 maturity date. This note also contains customary events of default.


On November 30, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of May 30, 2014. This note also contains customary events of default.


On December 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a June 1, 2014 maturity date. This note also contains customary events of default.


On December 31, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of June 30, 2014. This note also contains customary events of default.


On January 1, 2014, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a July 1, 2014 maturity date. This note also contains customary events of default.


On January 31, 2014, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of July 31, 2014. This note also contains customary events of default.


Previous Independent Registered Public Accounting Firm



 

1. 

On October 21, 2013, Anton & Chia LLP (Anton & Chia) resigned as independent auditor our Company.

 

 

2.

The reports of Anton & Chia on the Companys consolidated unaudited financial statements as of and for the periods ended April 30, 2013 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Companys ability to continue as a going concern.





 

 

3. 

The board of directors of the Company represented by the board of directors discussed the resignation with Anton & Chia and reluctantly accepted such resignation.

 

 

4. 

During the Company's most recent interim periods, and any subsequent interim period preceding the resignation on October 21, 2013, there were no disagreements between the Company and Anton & Chia on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Anton & Chia, would have caused Anton & Chia to make reference to the subject matter of the disagreement(s) in connection with his reports.

 

  

5. 

The Company has provided Anton & Chia with a copy of the disclosures it is making in response to this Item.  The Company has requested Anton & Chia to furnish a letter addressed to the Commission stating whether it agrees with the statements made by the Company and, if not, stating the respects in which it does not agree.  The Company has filed the letter furnished by Anton & Chia as an exhibit to our Current Report on Form 8-K filed with the SEC on October 25, 2013.


New Independent Registered Public Accounting Firm


On October 23, 2013, the Company engaged W. T. Uniack & Co. CPAs as its new independent registered public accounting firm.  During the two most recent fiscal years and through October 23, 2013, the Company had not consulted with W. T. Uniack & Co. CPAs regarding any of the following:


1.

The application of accounting principles to a specific transaction, either completed or proposed;


2.

The type of audit opinion that might be rendered on the companys consolidated financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that W. T. Uniack & Co. CPAs concluded was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial report issues; or


3.

Any matter that was the subject of a disagreement, as that term is defined in item 304(a)(1)(iv) of Regulation S-K.


ITEM 6. EXHIBITS


Exhibit Number

Description of Exhibit


Filing

3.1

Articles of Incorporation


Filed with the SEC on October 7, 2008 as part of our Registration of Securities on Form S-1.

3.2

Bylaws


Filed with the SEC on October 7, 2008 as part of our Registration of Securities on Form S-1.

3.3

Extension of Option Agreement.


Filed with the SEC on November 15, 2011, as part of our Annual Report on Form 10-K.

3.4

Resolution Increasing Management Compensation Agreement.


Filed with the SEC on November 15, 2011, as part of our Annual Report on Form 10-K.

10.1

Mineral Property Option Agreement, by and between the Company and Thunder Bay Minerals, Inc., dated October 26, 2009.


Filed with the SEC on October 28, 2009, as part of our Current Report on Form 8-K.

10.2

Purchase Agreement between the Company and John Sadowski, President of North Star Prospecting, Inc., dated May 4, 2010.


Filed with the SEC on May 10, 2010, as part of our Current Report on Form 8-K.

10.3

Purchase Agreement between the Company and Lauren Notar, dated July 30, 2010.


Filed with the SEC on August 4, 2010, as part of our Current Report on Form 8-K.

10.4

Purchase Agreement between the Company and Vulture Gold, LLC., dated August 7, 2010.


Filed with the SEC on August 12, 2010 as part of our Current Report on Form 8-K.

10.5

Promissory Note by and between the Company and Asher Enterprises, Inc., dated January 23, 2012.


Filed with the SEC on March 15, 2012 as part of our Quarterly Report on Form 10-Q.

10.6

Promissory Note by and between the Company and Greenshoe Investments, dated March 19, 2012.


Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.

10.7

Property Option Agreement, dated March 28, 2012.


Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.

10.8

Promissory Note by and between the Company and Asher Enterprises, Inc., dated May 14, 2012.


Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.

10.9

Promissory Note by and between the Company and Asher Enterprises, Inc., dated October 5, 2012


Filed with the SEC on November 7, 2012 as part of our Annual Report on Form 10-K.

10.10

Promissory Note by and between the Company and Syndication Capital, LLC., dated May 1, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.11

Employment Agreement by and between the Company and Dhugald Pinchin, dated May 15, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.12

Promissory Note by and between the Company and Dhugald Pinchin, dated May 31, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.13

Promissory Note by and between the Company and Syndication Capital, LLC, dated June 1, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.14

Promissory Note by and between the Company and Dhugald Pinchin, dated June 30, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.15

Promissory Note by and between the Company and Syndication Capital, LLC., dated July 1, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.16

Promissory Note by and between the Company and Dhugald Pinchin, dated July 31, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.17

Promissory Note by and between the Company and Syndication Capital, LLC., dated August 1, 2013


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.18

Promissory Note by and between the Company and Dhugald Pinchin, dated August 31, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.19

Promissory Note by and between the Company and Syndication Capital, LLC., dated September 1, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.20

Promissory Note by and between the Company and Dhugald Pinchin, dated September 30, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.21

Promissory Note by and between the Company and Syndication Capital, LLC., dated October 1, 2013.


Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.

10.22

Promissory Note by and between the Company and DhugaldPinchin, dated October 31, 2013.


Filed herewith.

10.23

Promissory Note by and between the Company and Syndication Capital, LLC., dated November 1, 2013.


Filed herewith.

10.24

Promissory Note by and between the Company and Syndication Capital, LLC., dated November 1, 2013.


Filed herewith.

10.25

Promissory Note by and between the Company and DhugaldPinchin, dated November 30, 2013.


Filed herewith.

10.26

Promissory Note by and between the Company and Syndication Capital, LLC., dated December 1, 2013.


Filed herewith.

10.27

Promissory Note by and between the Company and Asher Enterprises, Inc., dated December 13, 2013.


Filed herewith.

10.28

Promissory Note by and between the Company and DhugaldPinchin, dated December 31, 2013.


Filed herewith.

10.29

Promissory Note by and between the Company and Syndication Capital, LLC., dated January 1, 2014.


Filed herewith.

10.30

Promissory Note by and between the Company and DhugaldPinchin, dated January 31, 2014.


Filed herewith.

16.1

Representative Letter from DeJoya Griffith, LLC, dated January 8, 2013.


Filed with the SEC on January 9, 2013 as part of our Quarterly Report on Form 10-Q.

16.2

Representative Letter from Anton & Chia, LLP, dated October 25, 2013.


Filed with the SEC on October 25, 2013 as part of our Current Report on Form 8-K.

21.01

List of Subsidiaries


Filed with the SEC on June 19, 2013 as part of our Quarterly Report on Form 10-Q.

31.01

Certification of Principal Executive Officer Pursuant to Rule 13a-14


Filed herewith.

31.02

Certification of Principal Financial Officer Pursuant to Rule 13a-14


Filed herewith.

32.01

Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act


Filed herewith.

101.INS*

XBRL Instance Document


Furnished herewith.

101.SCH*

XBRL Taxonomy Extension Schema Document


Furnished herewith.

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document


Furnished herewith.

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document


Furnished herewith.

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document


Furnished herewith.

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document


Furnished herewith.





*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.



SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.










SOURCE GOLD CORP.


Dated: March 25, 2014



/s/ Dhugald Pinchin



Dhugald Pinchin



Its: President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer


In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.




Dated: March 25, 2014


/s/ Dhugald Pinchin


By: Dhugald Pinchin

Its: Director