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EX-31 - CERTIFICATION - Amazing Energy Oil & Gas, Co.exhibit312.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549


FORM 10-Q


(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2014


o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ______ to ______


GOLD CREST MINES, INC.

(Exact name of registrant as specified in its charter)


Nevada

000-52392

82-0290112

(State or other jurisdiction of incorporation or organization)

Commission file number

(IRS Employer Identification Number)


724 E Metler Lane

 Spokane, WA

 


99218

(Address of principal executive offices)

 

(Zip Code)


Registrant's telephone number, including area code: (509) 893-0171


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


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  o    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.  


Large accelerated filer

o

 

Accelerated filer

o

Non-accelerated filer

o

(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 o  No x


Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practical date:  


At August 1, 2014, 94,005,828 shares of the registrants common stock were outstanding.



1





GOLD CREST MINES, INC.

FORM 10-Q

For the Quarter Ended June 30, 2014


TABLE OF CONTENTS



 

Page #

PART I - Financial Information

 

 

 

 

 

Item 1

Financial Statements (Unaudited)

3

 

 

 

 

 

 

Consolidated Balance Sheets

3

 

 

 

 

 

 

Consolidated Statements of Operations

4

 

 

 

 

 

 

Consolidated Statements of Cash Flows

5

 

 

 

 

 

 

Notes to Consolidated Financial Statements

6

 

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

 

 

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

15

 

 

 

 

 

Item 4

Controls and Procedures

15

 

 

 

 

PART II - Other Information

 

 

 

 

 

Item 1      

Legal Proceedings

15

 

 

 

 

 

Item 1A     

Risk Factors

15

 

 

 

 

 

Item 2      

Unregistered Sale of Equity Securities and Use of Proceeds

15

 

 

 

 

 

Item 3     

Defaults upon Senior Securities

15

 

 

 

 

 

Item 4      

Mine Safety Disclosures

15

 

 

 

 

 

Item 5

Other Information

16

 

 

 

 

 

Item 6

Exhibits

16

 

 

 

 

Signatures

17

 

 

 

 





2




PART I - FINANCIAL INFORMATION


Item 1.  Financial Information and Footnotes.


GOLD CREST MINES, INC.

(AN EXPLORATION STAGE COMPANY)

Consolidated Balance Sheets

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

 

 

2014

 

2013

 

 

 

 

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

$

9,077

$

16,813

 

 

 

 

Total Current Assets

 

9,077

 

16,813

 

 

 

 

 

 

 

 

Mineral properties

 

11,373

 

11,373

 

 

TOTAL ASSETS

$

20,450

$

28,186

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

$

30,033

$

19,051

 

 

Accrued liabilities

 

88,273

 

69,434

 

 

Loan from Afranex (Note 5)

 

80,213

 

80,213

 

 

 

 

Total Current Liabilities

 

198,519

 

168,698

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

198,519

 

168,698

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Notes 5 and 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Preferred stock; no par value; 10,000,000 shares

 

 

 

 

 

 

 

authorized, none issued or outstanding

 

-

 

-

 

 

Common stock; $0.001 par value; 500,000,000 shares

 

 

 

 

 

 

 

authorized; 94,005,828 and 91,805,828 shares issued and outstanding, respectively

 

94,006

 

91,806

 

 

Additional paid-in capital

 

9,495,503

 

9,475,703

 

 

Accumulated deficit during exploration stage

 

(9,767,578)

 

(9,708,021)

 

 

 

 

Total Stockholders' Deficit

 

(178,069)

 

(140,512)

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

20,450

$

28,186

 

 

 

 

 

 

 

 

 

 






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







3







GOLD CREST MINES, INC.

(AN EXPLORATION STAGE COMPANY)

Consolidated Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

REVENUES

$

-

$

-

$

-

$

-

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Legal and accounting expenses

 

2,750

 

2,216

 

14,826

 

13,483

 

Directors' fees

 

2,500

 

-

 

2,500

 

-

 

General and administrative

 

27,094

 

22,352

 

42,231

 

41,543

 

TOTAL OPERATING EXPENSES

 

32,344

 

24,568

 

59,557

 

55,026

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(32,344)

 

(24,568)

 

(59,557)

 

(55,026)

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

(32,344)

 

(24,568)

 

(59,557)

 

(55,026)

INCOME TAXES

 

-

 

-

 

-

 

-

NET LOSS

$

(32,344)

$

(24,568)

$

(59,557)

$

(55,026)

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE - BASIC

 

 

 

 

 

 

 

 

 

AND DILUTED

$

Nil

$

Nil

$

Nil

$

Nil

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER

 

OF SHARES OUTSTANDING, BASIC

 

 

 

 

 

 

 

 

 

AND DILUTED

 

92,240,993

 

89,305,828

 

92,024,613

 

89,272,574

 

 

 

 

 

 

 

 

 

 

 



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

 

 









4









GOLD CREST MINES, INC.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

June 30,

 

June 30,

 

 

 

 

2014

 

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 Net loss

$

(59,557)

$

(55,026)

 

 Adjustments to reconcile net loss to net cash used

 

 

 

 

 

     by operating activities:

 

 

 

 

 

 Changes in:

 

 

 

 

 

 

Equity compensation for management and directors

 

-

 

1,800

 

 

Accounts payable and accrued liabilities

 

29,821

 

6,673

 

 

       Net cash used by operating activities

 

(29,736)

 

(46,553)

 

 

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 Proceeds from sale of stock

 

22,000

 

-

 

 Payments of financing fees

 

-

 

(2,500)

 

Loan from Afranex (Note 5)

 

-

 

55,000

 

 

       Net cash provided by financing activities

 

22,000

 

52,500

 

 

 

 

 

 

 

 

 Net change in cash and cash equivalents

 

(7,736)

 

5,947

 

 Cash and cash equivalents, beginning of period

 

16,813

 

1,552

 

 Cash and cash equivalents, end of period

$

9,077

$

7,499















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






5



Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements



NOTE 1.  Basis of Presentation


Gold Crest Mines, Inc. and its subsidiaries (“Gold Crest” and “the Company”) is a Nevada corporation originally incorporated on August 20, 1968, as Silver Crest Mines, Inc., an Idaho corporation.


On August 1, 2006, Gold Crest acquired 100% of the issued and outstanding shares of Niagara Mining and Development Co., (“Niagara”), an Idaho corporation formed on January 11, 2005, and its wholly-owned subsidiary, Kisa Gold Mining, Inc. (“Kisa”), an Alaskan corporation formed on July 28, 2006. Gold Crest’s sole asset on the merger date was cash of $7,456, which was accounted for as being acquired by Niagara in exchange for 14,600,100 common shares of Niagara. Niagara’s sole asset on the merger date was cash of $150,000 and its wholly owned subsidiary Kisa. Neither company had liabilities on the date of the merger. This transaction has been treated as a reverse merger, effectively as if Niagara had issued shares for consideration equal to the net monetary assets of Gold Crest. Under reverse acquisition accounting, the consolidated financial statements of the entity are considered a continuation of the financial statements of Niagara, the accounting acquirer. On June 20, 2008, 100% of the issued and outstanding shares of Kisa were transferred from Niagara to the Company.


The Company is in the business of exploration, development, and if warranted the mining of properties containing valuable mineral deposits. The focus of the Company’s exploration programs is directed at precious metals, primarily gold.


The interim Consolidated Financial Statements of the Company and its subsidiaries are unaudited.  In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included.  All such adjustments are, in the opinion of management, of a normal recurring nature.  The results reported in these interim Consolidated Financial Statements are not necessarily indicative of the results that may be reported for the entire year and that the results at June 30, 2014 may not be indicative of December 31, 2014.  These interim Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2013.


NOTE 2.  Summary of Significant Accounting Policies


This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.


Consolidation of Subsidiaries


The consolidated financial statements include the Company’s accounts and the accounts of wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.


Cash and Cash Equivalents


Highly liquid short-term investments with a remaining maturity when purchased of three months or less are classified as cash equivalents. The Company deposits its cash and cash equivalents in high quality financial institutions.


Fair Values of Financial Instruments


The carrying amounts of financial instruments including cash and cash equivalents approximated their fair values as of June 30, 2014 and December 2013.




6



Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements


Fair Value Accounting


Accounting guidance has established a hierarchy of assets that are measured at fair value on a recurring basis. The three levels included in the hierarchy are:

·

Level 1: quoted prices in active markets for identical assets or liabilities

·

Level 2: significant other observable inputs

·

Level 3: significant unobservable inputs


At June 30, 2014 and December 31, 2013, the Company has no assets or liabilities that are recorded at fair value on a recurring basis.


Basic and Diluted Net Loss Per Share


Net loss per share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted net loss per share for the Company is the same as basic net loss per share, as the inclusion of common stock equivalents would be anti-dilutive. At June 30, 2014 and 2013, the Company had no outstanding common stock equivalents.


NOTE 3.  New Accounting Pronouncements


In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-10, Elimination of Certain Financial Reporting Requirements. This standard provides guidance on the presentation of development stage entities, removing all incremental financial reporting requirements from United States Generally Accepted Accounting Principles (“U.S. GAAP”) for development stage entities.  The new requirements are effective for public entities in fiscal years (including interim periods) beginning after December 15, 2014, with early adoption permitted. The Company has elected to adopt this guidance effective June 30, 2014 and no longer present or disclose any information required specifically for development stage entities in our consolidated financial statements.


NOTE 4. Going Concern


As shown in the accompanying financial statements, the Company has had no revenues and incurred an accumulated deficit of $9,767,578 through June 30, 2014. Another factor is that the Company has a negative current ratio of 0.046: 1 at June 30, 2014. The current ratio is a measurement of the degree to which current assets cover current liabilities (current assets/ current liabilities). A high ratio indicates a good probability the enterprise can retire current debts. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to seek additional capital from new equity securities offerings and joint venture agreements that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.


The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.


Should the Company be unable to raise capital through future private placements, its business, and, as a result, its financial position, results of operations and cash flow will likely be materially adversely impacted. As such, substantial doubt as to the Company’s ability to continue as a going concern remains as of the date of these financial statements.


The Company believes it will need an estimated $150,000 to $200,000 to continue operations through the next twelve months. The timing and amount of capital requirements will depend on a number of factors, including the Company’s ability to successfully maintain a joint venture on our Alaska properties and the Company’s future personnel requirements.



7




Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements



NOTE 5.  Mineral Properties


In Alaska, the Company’s wholly owned subsidiary Kisa controls or has interests in five claim blocks consisting of 274 State of Alaska mining claims covering 42,280 acres. Four of the claim blocks making up 35,240 acres comprise the Company’s Southwest Kuskokwim Project and the remaining claim group consisting of 7,040 acres is the Company’s Buckstock Project. The Southwest Kuskokwim claim blocks are located in southwest Alaska approximately 90 miles east of the village of Bethel on State of Alaska-owned lands. The Buckstock claim group is located approximately 30-80 miles south of the Donlin Creek deposit and north of the Company’s Southwest Kuskokwim claim groups.


The following is a summary of the Company’s mineral properties in Alaska:


Alaska Mineral Properties

 

Number of Claims

 

Acres

 

Carrying Value at       June 30,     2014

 

Carrying Value at

December 31,    2013

Southwest Kuskokwim Project

 

 

 

 

 

 

 

 

    AKO

 

73

 

11,680

 

$               2,543           

 

$           2,543

    Luna

 

50

 

8,000

 

-

 

-

    Kisa

 

38

 

5,840

 

3,314

 

3,314

    Gold Lake

 

69

 

9,720

 

5,516

 

5,516

TOTAL Southwest Kuskokwim Project

 

230

 

  35,240

 

               11,373

 

         11,373

 

 

 

 

 

 

 

 

 

Buckstock Project

 

 

 

 

 

 

 

 

    Chilly

 

44

 

7,040

 

                       -

 

-

 TOTAL Buckstock Project

 

44

 

7,040

 

                        -

 

                   -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

274

 

42,280

 

  $           11,373

 

$         11,373


In Alaska, the lands are held under and are subject to the State’s mining laws and regulations. The Company is required to perform certain work commitments and pay annual assessments to the State of Alaska to hold these claims in good standing.  The commitments and annual assessments for 2014 will be due no later than November 30, 2014. See “Note 7. Commitments and Contingencies”.


North Fork Option Master Earn-in Agreement


On January 27, 2010, the Company, through its wholly owned subsidiary, Kisa signed an option agreement with North Fork Resources Pty Ltd (“North Fork”) which grants North Fork an exclusive option to purchase and/or earn an interest in the Company’s Southwest Kuskokwim Project area (“The Projects”).


Under the terms of the option and amendments thereto, North Fork made payments to the Company totaling $30,000 in 2010 for the exclusive right to explore the claims up until October 31, 2010. On October 18, 2010 North Fork formally notified the Company of their intent to exercise the option over the Alaska properties.  The total of the two payments of $30,000 received from North Fork was recognized as income during the year ended December 31, 2010.


On March 28, 2011 the Master Earn-In agreement (“the Agreement”) with North Fork was executed which maintained the same terms as the originals terms.


On October 28, 2013, the Company and North Fork agreed to an extension on the first earn-in date from October 31, 2013 to October 31, 2014, this extension was later memorialized in an executed amendment dated February 12, 2014.  As consideration for the one year extension, North Fork made a one-time extension payment to the Company in the amount of $30,000 which was recognized as income during the year ended December 31, 2013.



8




Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements



The following is a breakdown of the proposed earn-in terms, as amended:


1.

The initial interest at the time North Fork exercises its option to earn into The Projects will be as follows:

a.

Gold Crest Mines, Inc. – 100%

b.

North Fork – 0%

2.

North Fork can earn a 51% interest in The Projects by the expenditure of $3,000,000 on The Projects by October 31, 2014.

3.

If North Fork withdraws from the Joint Venture prior to earning a 51% interest in The Projects, it will have no further interest in The Projects.

4.

North Fork can earn an additional 24% interest in The Projects, taking its total interest to 75% by the expenditure of an additional $3,000,000 by October 31, 2016.

5.

North Fork can earn a total interest of 90% in any of The Projects claim blocks by the completion of a Bankable Feasibility Study.

6.

Gold Crest Mines, Inc. will retain a free carried 10% interest in The Projects up to a Decision to Mine at which point it can elect to contribute at 10% or dilute to a 2% Net Smelter Royalty.

7.

North Fork is obliged to keep The Projects in good standing.

8.

North Fork is the sole manager of The Projects and will make all decisions in regards to the exploration programs.


Afranex Terms Sheet


On June 5, 2012, and later amended on August 28, 2012 and February 13, 2013, the Company signed a Terms Sheet with Afranex, a company related to the Company’s joint venture partner North Fork. On February 26, 2013, and later amended on March 26, 2013, June 5, 2013, January 30, 2014, March 24, 2014 and June 30, 2014, the Company executed a new version of the Terms Sheet with Afranex wherein Afranex proposed to purchase up to 100% of Kisa, Gold Crest’s wholly owned subsidiary, in one of two proposed options.  The Kisa common shares represent 100% ownership of the capital stock of Kisa.  


Kisa’s only assets include the Company’s Southwest Kuskokwim Project and the Buckstock Project areas which consist of exploration properties in southwest Alaska comprised of 42,280 acres of State of Alaska-owned lands.


One option is if the Company sells 100% of its ownership interest in Kisa to Afranex, Afranex would pay Gold Crest 12,500,000 shares of Afranex stock valued at AUD$0.20 per share and grant Gold Crest an Afranex ordinary share 4-year option to purchase 3,125,000 shares exercisable at AUD$0.25 per share.


Alternatively, if the Company sells 80% of its Kisa shares to Afranex, Afranex would pay Gold Crest 10,000,000 ordinary shares of Afranex stock valued at AUD$0.20 per share and grant Afranex an option to purchase the remaining 20% of the Kisa shares in consideration for Afranex ordinary shares valued at $500,000, on or before June 30, 2015.  Gold Crest would be granted a 4-year option to purchase 2,500,000 ordinary Afranex shares at a price of AUD$0.25 per share.


The following is a breakdown of the main details of the Terms Sheet, which incorporates the final amendments to the terms sheet:


1.

Consideration:

a.

Afranex agrees to pay Gold Crest the sum of $100,000 (of which $25,000 was advanced to Gold Crest from Afranex as of December 31, 2012 and a total of $80,000 as of June 30, 2014, and

b.

One option is if the Company sells 80% of its ownership interest in Kisa to Afranex, Afranex would issue Gold Crest 10,000,000 fully paid ordinary shares in the capital of Afranex at an issue price of AUD$0.20 per share, or that number of shares depending on the way Afranex decides to become an ASX-listed company (Consideration Shares) and grant Gold Crest 2,500,000 unlisted options to be issued fully paid, ordinary shares in Afranex, exercisable at AUD$0.25 per option and expiring four years from the date of grant.

c.

The alternative option would be if the Company sells 100% of its ownership interest in Kisa to Afranex, Afranex would pay Gold Crest 12,500,000 shares of Afranex stock valued at AUD$0.20 per share and grant Gold Crest an Afranex ordinary share 4-year option to purchase 3,125,000 shares exercisable at AUD$0.25 per share.



9




Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements



2.

Completion of the Acquisition is conditional on the satisfaction (or waiver by the parties) of the certain conditions precedent such as due diligence by Afranex on Kisa, the approval of the board of Afranex as well as the approval of the shareholders of Gold Crest among other conditions.  If these conditions are not satisfied or waived by September 30, 2014, this term sheet agreement will expire.


3.

Settlement of the Acquisition will occur on that date which is five business days of satisfaction (or waiver) of the conditions precedent.  At settlement of (b) or (c), Afranex will settle the consideration set forth above and Gold Crest will deliver the respective number of Kisa shares.  In the event the Company only sells Afranex 80% of the Kisa shares, Gold Crest agrees that an incorporated joint venture is created between Afranex or Parent and Gold Crest in relation to Kisa on the terms and conditions of the joint venture, which, upon the commencement date, the initial shareholding interests in Kisa will be 80% Afranex and 20% Gold Crest.


4.

If Gold Crest sells 80% of Kisa to Afranex, Afranex may, by written notice to Gold Crest at any time up to June 30, 2015, elect to acquire all (and not part) of Gold Crest’s remaining fully paid Kisa shares in return for the issue of AUD$500,000 worth of Afranex fully paid, ordinary shares if by IPO, or parent shares if Backdoor Listed, which is a corporate finance term that has the same meaning as reverse merger, reverse listing or reverse IPO.


5.

Notwithstanding the fact that this Terms Sheet is legally binding on the Parties, Afranex and Gold Crest agree to enter into a formal share sale and purchase agreement to more fully document the terms of the Acquisition (to be prepared by Afranex’s solicitors) which shall be on terms acceptable to Kisa and Afranex (acting reasonably) and which shall be consistent with the terms set out in the Terms Sheet.


Afranex Loan Facility Agreement


On July 26, 2012, the Company signed a Loan Facility Agreement (“Loan”) in the amount of $15,000 with Afranex which entitled the Company to make individual draw downs in $5,000 increments of the Loan until the Loan has been exhausted to provide the Company with immediate working capital requirements.   On October 26, 2012, the Company signed a first deed of variation to the Loan which increased the Loan amount from $15,000 to $25,000.   


On February 13, 2013, the Company signed a second deed of variation to the Loan which increased the Loan amount from $25,000 to $80,000 and extended the due date out to June 30, 2013.  On July 26, 2013, the Company signed a third deed of variation to the Loan which increased the Loan amount from $80,000 to $100,000 and extended the due date out to January 31, 2014.  The expiration date has been extended several times, with the latest extension entered into via mutual consent by both parties on June 30, 2014 to extend the expiration date to September 30, 2014.


As of June 30, 2014, the Company has received $80,000 on the Loan and recorded the funds as a current liability.  The funds are intended to be deducted from the $100,000 consideration per the Afranex terms sheet. See “Afranex Terms sheet” above for further details.


NOTE 6.  Common Stock and Common Stock Warrants


Common Stock


The Company is authorized to issue 500,000,000 shares of its common stock. All shares of common stock are equal to each other with respect to voting, liquidation, dividend, and other rights. Owners of shares are entitled to one vote for each share owned at any Shareholders’ meeting. The common stock of the Company does not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of the shares voting in an election of directors may elect all of the directors if they choose to do so.


On June 11, 2014 the Company began a private placement offering up to a maximum of 3,000,000 shares at $0.01 per share for a maximum of $30,000 in proceeds.  The offering is scheduled to end on August 15, 2014.  As of June 30, 2014, the Company has issued 2,200,000 shares raising a total of $22,000.  The shares were being offered and sold by officers and directors of the Company who received no remuneration for the sale of the shares.

During the six months ended June 30, 2013, the Company issued 100,000 shares of common stock to an officer and director valued at $1,800.  





10




Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements



Common Stock Warrants


There was no warrant activity during the six months ended June 30, 2014 and no warrants were outstanding at June 30, 2014 or December 31, 2013.


NOTE 7.  Commitments and Contingencies


Alaska Mineral Property Rent and Assessment Work Commitments


In Alaska, land holdings consist of state mining claims and prospecting sites totaling 42,280 acres of land. Annual rental payments in the approximate amount of $75,000 for these claims are due by November 30, 2014. If these rental payments are not paid by the due date, the claims will be considered abandoned.


The Alaska Department of Natural Resources, Division of Mining, Land & Water requires that upon the prospecting, and the discovery of a locatable mineral and the staking of mineral location, annual labor must be performed on the location each labor year in further development of the locatable mineral so that it can be mined. The labor year for the claims begins on September 1 and ends the following September 1. The Company or its joint venture partner, if applicable, will be required to perform qualified labor in the approximate amount of $110,000 by September 1, 2014 with the possibility, depending on any qualified carry-over amounts that can be applied from the prior labor years on certain claim groups. If these labor requirements are not met by the due date, the claims will be considered abandoned. The commitments and annual assessments for 2014 will be due no later than November 30, 2014.





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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


This Form 10-Q, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, includes forward-looking statements. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Gold Crest Mines, Inc. or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.  Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock.  As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under Section 21E are unavailable to us.

The following discussion should be read in conjunction with the unaudited consolidated financial statements included elsewhere in this report, as well as the audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2013.


Overview and Plan of Operation


As discussed in “Note 4. Going Concern” to our consolidated financial statements, the Company has had no revenues and incurred an accumulated deficit of $9,767,578 through June 30, 2014. Another factor is that the Company has a negative current ratio of 0.046: 1 at June 30, 2014.  The current ratio is a measurement of the degree to which current assets cover current liabilities (current assets/ current liabilities). A high ratio indicates a good probability the enterprise can retire current debts.  The Company feels that these factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to seek additional capital from new equity securities offerings and joint venture agreements that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.


We are in the business of exploration, development, and if warranted the mining of properties containing valuable mineral deposits. We are traded on the over the counter market in the United States and, as is typical with such companies, losses are incurred in the stages of exploration and development, which typically need to be funded through equity or debt financing.


In southwest Alaska, the Company’s wholly owned subsidiary Kisa Gold Mining, Inc. ("Kisa") controls or has interests in nine claim blocks consisting of 274 State of Alaska mining claims covering 42,280 acres.


On March 28, 2011 the Company, through its wholly owned subsidiary, Kisa, executed a Master Earn-In agreement (“the Agreement”) with North Fork LLC, (“North Fork”) an Alaska limited liability company. This agreement calls for North Fork to explore for gold deposits on Kisa’s claim blocks in the Southwest Kuskokwim Project area and Buckstock Project area (“Projects”). The Projects consist of the Company’s exploration properties mentioned above. See “Note 5. Mineral Properties – North Fork Option Master Earn-in Agreement” to our consolidated financial statements for further details.


On June 5, 2012, the Company, through its wholly owned subsidiary, Kisa signed a Terms Sheet with Afranex Gold Limited (“Afranex”), a company related to our joint venture partners North Fork, which sets out the terms on which Afranex agrees to acquire up to 100% of the shares in Kisa. On February 13, 2013 an amendment was signed changing certain terms, most notably, changing the initial acquisition of only 80% of the shares of Kisa with an option to acquire the remaining 20% at any time up to June 30, 2015 for additional consideration.  See “Note 5. Mineral Properties – Afranex Term Sheet” to our consolidated financial statements for further details.




12





On July 26, 2012, the Company signed a Loan Facility Agreement (“Loan”) with Afranex for $15,000, and amendment on October 26, 2012 for an additional $10,000 all received before December 31, 2012. On February 13, 2013 another amendment was signed increasing the loan amount from $25,000 to $80,000 then increased to the full $100,000 on July 26, 2013 as well as extending the due date out to January 31, 2014.  The expiration date has been extended several times, with the latest extension entered into via mutual consent by both parties on June 30, 2014 to extend the expiration date to September 30, 2014.  As of June 30, 2014, the Company has received $80,000 on the Loan and recorded the funds as a current liability.  The funds are intended to be deducted from the $100,000 consideration per the Afranex terms sheet. See “Note 5. Mineral Properties – Afranex Loan Facility Agreement” to our consolidated financial statements for further details.


Liquidity and Capital Resources


We have limited capital resources and thus have had to rely upon the sale of equity securities for the cash required for exploration and development purposes, for acquisitions and to fund our administration. Since we do not expect to generate any revenues in the near future, we must continue to rely upon the sale of our equity securities to raise capital. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any period or, if available, that it can be obtained on terms satisfactory to us.


Our cash balance at June 30, 2014 was $9,077 versus $16,813 at December 31, 2013. This decrease is primarily due regular operating expenses of the Company during the first six months ending June 30, 2014.


Future Outlook


Based on the current market environment and our low share price it is not likely we will be able to raise enough money through a private placement of our common stock to fully implement our business plan.


We continue to proceed with our joint venture partner, North Fork, who continues to expend funds under the master earn-in agreement and just completed another season of exploration in the Company’s Southwest Kuskokwim Project area.  On October 31, 2013 a verbal agreement was reached whereas North Fork agreed to pay Gold Crest an extension fee of $30,000, which was received on November 5, 2013, to extend the date where the first $3,000,000 earn-in is to be expended out until October 31, 2014.  See “Note 5. Mineral Properties – North Fork Option Master Earn-in Agreement” to our consolidated financial statements for further details.


We are currently also working towards an agreement with Afranex for them to acquire up to 100% of the shares in Kisa which will bring in capital related to the transaction, of which we are currently receiving advances on.  See “Note 5. Mineral Properties – Afranex Term Sheet and Afranex Loan Facility Agreement” to our consolidated financial statements for further details.


Results of Operations

Comparison of the Three and Six Months Ended June 30, 2014 and June 30, 2013:


The following tables set forth certain information regarding the components of our Consolidated Statements of Operations for the three and six months ended June 30, 2014 compared with the three and six months ended June 30, 2013. The tables are provided to assist in assessing differences in our overall performance:



13







 

 

 

The Three Months Ended

 

 

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

REVENUES

$

-

$

-

$

-

 

-

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 Legal and accounting expenses

 

2,750

 

2,216

 

534

 

24.1%

 

 Directors’ fees

 

2,500

 

-

 

2,500

 

-

 

 General and administrative

 

27,094

 

22,352

 

4,742

 

21.2%

 

    TOTAL OPERATING EXPENSES

 

32,344

 

24,568

 

7,776

 

31.7%

 LOSS FROM OPERATIONS

 

(32,344)

 

(24,568)

 

(7,776)

 

31.7%

 

 Interest income

 

-

 

-

 

-

 

-

 

 Interest expense

 

-

 

-

 

-

 

-

 

     TOTAL OTHER INCOME (EXPENSE)

 

-

 

-

 

-

 

-

 LOSS BEFORE TAXES

$

(32,344)

$

(24,568)

$

(7,776)

 

31.7%



 

 

 

The Six Months Ended

 

 

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

 

 

2014

 

2013

 

$ Change

 

% Change

REVENUES

$

-

$

-

$

-

 

-

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 Legal and accounting expenses

 

14,826

 

13,483

 

1,343

 

10.0%

 

 Directors’ fees

 

2,500

 

-

 

2,500

 

-

 

 General and administrative

 

42,231

 

41,543

 

688

 

1.7%

 

    TOTAL OPERATING EXPENSES

 

59,557

 

55,026

 

4,531

 

8.2%

 LOSS FROM OPERATIONS

 

(59,557)

 

(55,026)

 

(4,531)

 

8.2%

 

 Interest income

 

-

 

-

 

-

 

-

 

 Interest expense

 

-

 

-

 

-

 

-

 

     TOTAL OTHER INCOME (EXPENSE)

 

-

 

-

 

-

 

-

 LOSS BEFORE TAXES

$

(59,557)

$

(55,026)

$

(4,531)

 

8.2%


Overview of Operating Results


Operating Expenses for the three months ended June 30, 2014 compared to the three months ended June 30, 2013.


There was an increase of $7,776 in operating expenses during the three months ended June 30, 2014 compared to the three months ended June 30, 2013.  This increase was primarily in General and Administrative expenses related to increased payroll expenses of approximately $6,000 for the three months ended June 30, 2014 due to an increased workload by management compared to that same time frame in 2013.  Also in operating expenses, there was an increase of approximately $1,500 in travel related expenses in the three months ended June 30, 2014 versus the three months ended June 30, 2013.  Offsetting this increase was a $2,500 decrease in financing fees that were incurred in the three months ended June 30, 2013 versus zero for the three months ended June 30, 2014.


Director fees were $2,500 higher for the three months ended June 30, 2014 due to a payment to an outgoing director versus zero for the three months ended June 30, 2013.


Operating Expenses for the six months ended June 30, 2014 compared to the six months ended June 30, 2013.


There was an increase of $4,531 in operating expenses during the six months ended June 30, 2014 compared to the six months ended June 30, 2013.  This increase was primarily in General and Administrative expenses related to increased payroll expenses of approximately $3,900 for the six months ended June 30, 2014 compared to that same time frame in 2013.  Also in operating expenses, there was an increase of approximately $1,500 in travel related expenses in the six months ended June 30, 2014 versus the six months ended June 30, 2014.  Offsetting this increase was a $2,500 decrease in financing fees that were incurred in the six months ended June 30, 2013 versus zero for the six months ended June 30, 2014.  There was also a decrease of approximately $1,100 in office expenses for the six months ended June 30, 2014 versus the same time frame in 2013 due to a concerted effort to keep office expenses to a minimum.


Director fees were $2,500 higher for the six months ended June 30, 2014 due to the payment to an outgoing director versus zero for the six months ended June 30, 2013.




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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not Applicable

ITEM 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report.  Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of June 30, 2014, in ensuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported.


Changes in Internal Control Over Financial Reporting


There were no changes in our internal control over financial reporting during the quarter ended June 30, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




PART II – OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.


None.


ITEM 1A.  RISK FACTORS.


Not Applicable to Smaller Reporting Companies


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


On June 12, 2014 the Company sold 2,200,000 common shares to an accredited investor for a total of $22,000 at $0.01 per share.  The shares were sold pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Act"),  in a private non-public transaction and deemed restricted securities which may not be publicly resold absent registration under the Act or an exemption from registration.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.


None


ITEM 4.  MINE SAFETY DISCLOSURES.


None.







15







ITEM 5.  OTHER INFORMATION.


Afranex Term Sheet


On June 30, 2014, we amended Clause 4 of the Term Sheet with Afranex Gold Limited extending the expiration date from June 30, 2014 to September 30, 2014.  Clause 4 states that the closing of their proposed acquisition of Kisa Gold was subject to the completion of Afranex's "due diligence".  This closing is also subject to future Gold Crest Mining shareholder approval.


Afranex Loan Facility Agreement:


On June 30, 2014 the Company extended the Afranex term sheet closing date for the proposed Kisa sale transaction to September 30, 2014 and provided that the $80,000 loan would be deducted from the $100,000 down payment due from Afranex at the proposed closing.   


ITEM 6.  EXHIBITS


Exhibit Number

Description of Document

 

 

31.1

Certification of CEO pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act

31.2

Certification of CFO pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act

32.1

Certification of CEO pursuant to 18 U.S.C. Section 1350

32.2

Certification of CFO pursuant to 18 U.S.C. Section 1350

10.1

Amendment to Terms Sheet and Loan Agreement between Kisa Gold Mining, Inc. and Afranex Gold Limited originally filed with the registrant’s Form 10K on April 16, 2013.  Filed as exhibit 10.1 with the Company’s 10-Q on August 14, 2013.

101.INS(1)

XBRL Instance Document

101.SCH(1)

XBRL Taxonomy Extension Schema Document

101.CAL(1)

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF(1)

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB(1)

XBRL Taxonomy Extension Label Linkbase Document

101.PRE(1)

XBRL Taxonomy Extension Presentation Linkbase Document









16








SIGNATURES



In accordance with the requirements of the Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in Spokane, Washington on August 12, 2014.


GOLD CREST MINES, INC.


By:  /s/ Terrence J. Dunne

Terrence J. Dunne

Chief Executive Officer

(Principal Executive Officer)


In accordance with the requirements of the Section 13 or 15(d) of the Exchange Act, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities on August XX, 2014.


/s/  TERRENCE J. DUNNE

 

 

 

Chief Executive Officer, President and Director

Terrence J. Dunne

 

 

(Principal Executive Officer)

/s/  MATTHEW J. COLBERT

 

 

 

Chief Financial Officer, Secretary/Treasurer and Director

Matthew J. Colbert

 

 

(Principal Financial and Accounting Officer)




17