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EX-31.1 - EX-31.1 - Oro East Mining, Inc.ex31-1.htm
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EX-32.1 - EX-32.1 - Oro East Mining, Inc.ex32-1.htm


 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 

 
FORM 10-Q
 

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

For the quarterly period ended September 30, 2015

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      

Commission file number 000-53136

Oro East Mining, Inc.

Delaware
(State or other jurisdiction of incorporation or organization)

26-2012582
(I.R.S. Employer Identification Number)

7817 Oakport Street, Suite 205, Oakland, CA 94621
(Address of Principal Offices)
 
(510) 638-5000
(Issuer’s Telephone Number)
  
                                                                                                                                
(Former name, former address and former fiscal year, if changed since last report)
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 Website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x    No ¨

Indicate by 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
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 581,823,700 shares of common stock, par value $.0001 per share, outstanding as of November 10, 2015. 
 
 
ORO EAST MINING, INC.
 
Table of Contents -

     
Page(s)
 
PART I – FINANCIAL INFORMATION:
     
         
Item 1.
 
1
 
         
   
1
 
         
   
2
 
         
   
3
 
         
   
4
 
         
Item 2.
 
6
 
         
Item 3.
 
8
 
         
Item 4.
 
8
 
         
PART II – OTHER INFORMATION:
     
         
Item 1.
 
9
 
         
Item 1A.
 
9
 
         
Item 2.
 
9
 
         
Item 3.
 
9
 
         
Item 4.
 
9
 
         
Item 5.
 
9
 
         
Item 6.
 
9
 
         
 
10
 
 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Oro East Mining, Inc., a Delaware corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995.  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology.  These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, the exercise of the approximately 81.1% control the Company’s voting securities the Company’s Chief Executive Officer, Tian Qing Chen, holds, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
 
 
 
 
 
PART I — FINANCIAL INFORMATION
  
Item 1.             FINANCIAL STATEMENTS

ORO EAST MINING, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
   
September 30,
   
December 31,
 
   
2015
   
2014
 
ASSETS
           
Current assets:
           
Cash
 
$
9,388
   
$
64,832
 
Inventories
   
18,734
     
18,734
 
Prepaid expenses
   
51,571
     
43,693
 
Other current assets
   
127,421
     
154,720
 
Total current assets
   
207,114
     
281,979
 
Property and equipment, net of accumulated depreciation of $206,461 and $106,669, respectively
   
558,918
     
658,045
 
TOTAL ASSETS
 
$
766,032
   
$
940,024
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current liabilities:
               
Current portion of long-term debt
 
$
19,303
   
$
15,554
 
Current portion of capital lease obligation
   
4,277
     
4,179
 
Accounts payable
   
79,718
     
148,322
 
Short-term notes payable
   
1,100,000
     
1,150,000
 
Convertible note payable, net of unamortized discount of $0 and $81,222, respectively
   
1,467,000
     
610,778
 
Other accrued liabilities
   
451,087
     
243,810
 
Advances-related party
   
204,907
     
372,017
 
Total current liabilities
   
3,326,292
     
2,544,660
 
Capital lease obligation, less current portion
   
-
     
3,171
 
Long-term debt, less current portion
   
1,852
     
16,838
 
TOTAL LIABILITIES
   
3,328,144
     
2,564,669
 
                 
                 
STOCKHOLDERS' DEFICIT
               
Preferred stock, $.0001 par value per share, 10,000,000 shares
       authorized; no shares issued and outstanding
   
 -
     
 -
 
Common stock, $.0001 par value per share, 2,000,000,000 shares
       authorized; 581,763,700 and 580,883,200 shares issued
       and outstanding, respectively
   
58,176
     
58,088
 
Additional paid-in capital
   
6,705,537
     
6,413,945
 
Accumulated deficit
   
(9,224,822
)
   
(8,011,200
)
Accumulated other comprehensive loss
   
(24,169
)
   
(24,115
)
Total Oro East Mining Inc. stockholders’ deficit
   
(2,485,278
)
   
(1,563,282
)
Noncontrolling interest
   
(76,834
)
   
(61,363
)
TOTAL STOCKHOLDERS' DEFICIT
   
(2,562,112
)
   
(1,624,645
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
766,032
   
$
940,024
 

See accompanying notes to unaudited consolidated financial statements.


ORO EAST MINING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
 
   
Three Months ended September 30,
   
Nine Months ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
Revenues:
                       
Sales of metal concentrates, net
 
$
-
   
$
15,044
   
$
-
   
$
16,918
 
                                 
Cost of revenues
   
-
     
20,308
     
-
     
20,308
 
                                 
Gross profit (loss)
   
-
     
(5,264
)
   
-
     
(3,390
)
                                 
Operating expenses:
                               
General and administrative
   
313,355
     
716,100
     
924,187
     
1,824,111
 
Total operating expenses
   
313,355
     
716,100
     
924,187
     
1,824,111
 
                                 
Other income (expense):
                               
Other income
   
-
     
-
     
627
     
-
 
Interest expense
   
(75,186
)
   
(216,916
)
   
(305,533
)
   
(368,877
)
Loss on disposal of assets
   
-
     
(36,389
)
   
-
     
(36,389
)
Total other expense
   
(75,186
)
   
(253,305
)
   
(304,906
)
   
(405,266
)
                                 
Net loss
   
(388,541
)
   
(974,669
)
   
(1,229,093
)
   
(2,232,767
)
Net loss attributable to noncontrolling interest
   
(4,849
)
   
(11,205
)
   
(15,471
)
   
(47,425
)
Net loss attributable to Oro East Mining Inc.
   
(383,692
)
   
(963,464
)
   
(1,213,622
)
   
(2,185,342
)
                                 
Other comprehensive loss
                               
Foreign currency translation adjustment
   
(45
)
   
(2,375
)
   
(54
)
   
(2,361
)
                                 
Comprehensive loss
 
$
(383,737
)
 
$
(965,839
)
 
$
(1,213,676
)
 
$
(2,187,703
)
                                 
Net loss attributable to Oro East Mining Inc. common stockholder per share - Basic and diluted
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
                                 
Weighted average number of common shares outstanding
   
581,717,546
     
559,069,539
     
581,445,257
     
548,954,166
 
 
See accompanying notes to unaudited consolidated financial statements.

 
ORO EAST MINING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Nine Months ended September 30,
 
   
2015
   
2014
 
CASH FLOW FROM OPERATING ACTIVITIES:
           
Net loss
 
$
(1,229,093
)
 
$
(2,232,767
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
99,792
     
93,493
 
Loss on disposal of assets
   
-
     
36,389
 
Share-based compensation
   
291,680
     
503,619
 
Amortization of debt discount
   
81,222
     
164,214
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
-
     
24,633
 
Inventories
   
-
     
(42,849
)
Prepaid expenses and other current assets
   
19,421
     
69,482
 
Accounts payable
   
(68,604
)
   
(85,156
)
Accrued liabilities
   
207,276
     
61,789
 
Net cash used in operating activities
   
(598,306
)
   
(1,407,153
)
                 
CASH FLOW USED IN INVESTING ACTIVITIES:
               
Purchases of property and equipment
   
(665
)
   
(487,798
)
                 
CASH FLOW FROM FINANCING ACTIVITIES:
               
Proceeds from convertible notes
   
850,000
     
575,000
 
Proceeds from short-term notes
   
-
     
2,050,000
 
Principal payments under capital lease obligation
   
(3,073
)
   
(2,629
)
Repayment of convertible  notes
   
(75,000
)
   
-
 
Repayment of long-term debt
   
(11,236
)
   
(8,424
)
Repayment of short-term notes
   
(50,000
)
   
(1,100,000
)
Net proceeds from (repayment of) shareholder advances
   
(167,110
)
   
373,436
 
Net cash provided by financing activities
   
543,581
     
1,887,383
 
                 
Effect of exchange rate on cash
   
(54
)
   
(2,361
)
                 
NET DECREASE IN CASH
   
(55,444
)
   
(9,929
)
                 
CASH AT BEGINNING OF PERIOD
   
64,832
     
57,972
 
                 
CASH AT END OF PERIOD
 
$
9,388
   
$
48,043
 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Interest paid
 
$
15,303
   
$
80,300
 
                 
NON-CASH INVESTING AND FINANCING ACTIVITY:
               
Share issuance for conversion of convertible note
 
$
-
   
$
360,000
 
Convertible notes issued at discount
 
$
-
   
$
423,750
 
Share issuance for conversion of short-term notes
 
$
-
   
$
100,000
 
 
See accompanying notes to unaudited consolidated financial statements.
 
 
ORO EAST MINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
NOTE 1          ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(a)         Basis of Presentation
 
The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. In the opinion of management, all adjustments for a fair statement of the results and operations and financial position for the interim periods presented have been included. All such adjustments are of a normal recurring nature.   The September 30, 2015 interim consolidated financial statements presented herein may not be indicative of the results of the Company for the year ending December 31, 2015. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 31, 2015.

(b)         Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(c)         Reclassification

Certain prior period amounts have been reclassified to conform with current period presentation.

NOTE 2          GOING CONCERN

The accompanying interim consolidated financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying interim consolidated financial statements, the Company has an accumulated deficit of $9,224,822 and a negative working capital of $3,119,178 at September 30, 2015. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity and debt financing and/or related party advances, but there is no assurance of additional funding being available. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying interim consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.

NOTE 3          SHORT-TERM NOTES PAYABLE

A summary of the short-term notes payable is as follows:
 
   
As of
September 30,
 2015
   
As of
December 31,
2014
 
Fixed-rate 15% note, due April 1, 2015 (1)
 
$
-
   
$
50,000
 
Fixed-rate 12% note, due April 30, 2016 (3)
   
100,000
     
100,000
 
Fixed-rate 12% note, due April 30, 2016 (3)
   
100,000
     
100,000
 
Fixed-rate 15% note, due April 30, 2016 (3)
   
800,000
     
800,000
 
Fixed-rate 12% note, due December 21, 2015 (2)
   
100,000
     
100,000
 
   
$
1,100,000
   
$
1,150,000
 
 
(1)
The note was paid off on March 31, 2015
(2)
The note was extended on June 22, 2015
(3)
The notes were extended in November 2015 from their previous maturity dates (see Note 7)
 
All notes are unsecured, and the Company has accrued interest of $182,790 as of September 30, 2015.
 

NOTE 4          CONVERTIBLE NOTES PAYABLE

A summary of the convertible notes payable is as below:

   
As of
September 30,
 2015
   
As of
December 31,
2014
 
Fixed-rate 12% convertible note, conversion price @$0.04/share, due April 14, 2016 (2)
 
$
500,000
   
$
500,000
 
Fixed-rate 12% convertible note, conversion price @$0.20/share, due February 20, 2015 (1)
   
-
     
20,000
 
Fixed-rate 12% convertible note, conversion price @$0.20/share, due February 28, 2015 (1)
   
-
     
25,000
 
Fixed-rate 12% convertible note, conversion price @$0.20/share, due March 16, 2015 (1)
   
-
     
30,000
 
Fixed-rate 12% convertible note, conversion price @$0.04/share, due April 14, 2016 (2)
   
20,000
     
20,000
 
Fixed-rate 12% convertible note, conversion price @$0.04/share, due April 23, 2016 (2)
   
40,000
     
40,000
 
Fixed-rate 12% convertible note, conversion price @$0.05/share, due November 17, 2015 (2)
   
30,000
     
30,000
 
Fixed-rate 12% convertible note, conversion price @$0.05/share, due December 1, 2015 (3)
   
17,000
     
17,000
 
Fixed-rate 12% convertible note, conversion price @$0.05/share, due December 10, 2015 (3)
   
10,000
     
10,000
 
Fixed-rate 8% convertible note, conversion price @$0.05/share, due January 21, 2016 (2)
   
720,000
     
-
 
Fixed-rate 8% convertible note, conversion price @$0.04/share, due December 30, 2015
   
  30,000
     
  -
 
Fixed-rate 8% convertible note, conversion price @$0.04/share, due January 30, 2016
   
  30,000
     
  -
 
Fixed-rate 8% convertible note, conversion price @$0.04/share, due February 26, 2016
   
  40,000
     
  -
 
Fixed-rate 8% convertible note, conversion price @$0.04/share, due March 25, 2016
   
  30,000
     
  -
 
Total
   
1,467,000
     
692,000
 
Less: unamortized discount
   
-
     
(81,222
)
   
$
1,467,000
   
$
610,778
 

(1)
The notes were paid off on March 16, 2015
(2)  
The notes were extended from their previous maturity dates with the conversion price changed to the market price on the dates they were extended. The $30,000 and $720,000 notes were extended in May and July, 2015, respectively, and the $500,000, $20,000 and $40,000 notes were all extended in October, 2015 (see Note 7). The Company analyzed the terms modification of the convertible notes under ASC 470-60, Troubled Debt Restructurings, and ASC 470-50, Extinguishment of Debt, and determined that the creditors had not granted a concession and the modifications were substantial.  The Company amortized the remaining discount on the convertible notes to interest expense on the dates of the conversion.  There were no direct costs or fees associated with the terms modification of the convertible notes. The Company also analyzed the modified conversion option under ASC 815, Derivatives and Hedging, and determined that the instrument does not qualify for derivative accounting and that the instrument does not have a beneficial conversion feature.
(3)  
These notes were also extended from their previous maturity dates.  The Company analyzed the terms modification of the convertible notes under ASC 470-60 and determined that the modifications were not substantial as the only change to the terms of the notes was to extend the maturity date.

NOTE 5          RELATED PARTY TRANSACTIONS
 
The shareholder and officer of the Company paid expenses on behalf of the Company, and the Company paid back $167,110 to the shareholder and officer during the nine months ended September 30, 2015. As of September 30, 2015, the Company still owed the shareholder and officer the amount of $204,907. The balances are unsecured, non-interest bearing and due on demand.

In June 2015, the Company’s CEO entered into an auto lease on behalf of the Company requiring 36 monthly payments of approximately $1,250. 
 
NOTE 6          EQUITY

The Company issued a total of 880,500 common shares for services received from employees and non-employees and recognized a total of $291,680 in share-based compensation during the nine months ended September 30, 2015.

NOTE 7          SUBSEQUENT EVENTS

In October, 2015, the maturity dates of the $500,000, $40,000 and $20,000 convertible notes have been extended with the conversion price changed to $0.04 per share (see Note 4).

In October, 2015, the Company issued 60,000 common shares for services received from an unrelated third party.
 
In November, 2015, the maturity dates of the $800,000, $100,000 and $100,000 short-term notes have been extended to April 30, 2016 (see Note 3).
 
 
Item 2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    
 
The following discussion provides information that the Company’s management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with the Company’s consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. Undue certainty should not be placed on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Business Overview

This quarter the Company has continued with its development of a proprietary invention that would use parabolic solar energy to process dry mining gold tailings. On or about July 6, 2015, the Company filed a provisional patent application with the U.S. Patents and Trademarks Office. The patent pending invention would help the Company extract water from dry tailings from gold mining production. The purpose of the patent pending invention is to recycle and reuse all processed water. Such a process will advance mining production technology in a more eco-friendly direction, especially in light of California’s current drought.

Additionally, the Company has continued its inquiry into various possible asset acquisitions to expand its mining production operations. Due diligence for various assets and preliminary negotiations commenced to seek further asset acquisitions for the Company. However, at this time, no agreements have been finalized.

The Company has also been exploring its Red Bank Mine assets in Mariposa County, California. The Company entered into a letter of intent with Red Bank Trust for the purchase of mining claims known as the Red Bank Mine (“Red Bank Mine”). On December 12, 2014, the Company entered into a binding letter of intent with Red Bank Trust for the purchase of certain lode and placer mining claims and all mineral rights thereto, spanning 55 deeded acres in Mariposa County known as the Red Bank Mines, including an easement, right of entry, and other rights and interests as set forth in the letter of intent (“Mining Claims and Mineral Rights”). A long-form purchase agreement for the Mining Claims and Mineral Rights that integrates the letter of intent will be prepared by mutually agreed upon legal counsel or licensed brokers within 20 days of the expiration of the Due Diligence Period as set forth in the letter of intent.

Then, on or about May 20, 2015, the Company executed an extension for the Red Bank Mine conditions and the due diligence period for the Red Bank Mine transaction has been extended until November 30, 2015.

The parties agreed to a consideration valuation of $2,000,000.00 (Two Million U.S. Dollars) paid in part with 20,000,000 restricted shares of Company stock, which the parties value at $1,000,000.00, and paid in part with a Convertible Promissory Note and Convertible Note Purchase Agreement to Yan Ming Wu, the named beneficiary of the Red Bank Trust, in the sum of $1,000,000.00. Yan Ming Wu is a foreign national and citizen of the People’s Republic of China.  As of the filing date of this report, the Company is still performing its due diligence related to the Red Bank letter of intent.

The Company had previously entered into a Mining Lease and Royalties Agreement executed on June 24, 2013. Upon the execution of the letter of intent, the Agreement is voided, though in the event that the transactions contemplated by the letter of intent are not completed, the Agreement will be automatically effective again and enforceable upon termination of the letter of intent.
 
The Red Bank Mine property is located approximately 17 miles north of the town of Mariposa, California. We are currently conducting mineral exploration activities on the Red Bank Mine property in order to assess whether it contains any commercially exploitable mineral reserves. Currently there are no known mineral reserves on the Red Bank Mine property.

The Company had a geological evaluation report on the Red Bank Mine property prepared, entitled “National Instrument 43-101 Technical Report on Red Bank Mine – 81 Acres, Apns 003-350-0050; 003-340-0070; And 003-330-0060, Mariposa County, California, for Oro East Mining, Inc.” (the “Report”) by Robert Campbell, M.S., California Professional Geologist, California Certified Engineering Geologist and Principal Engineering Geologist of GeoSolve, Inc., on December 29, 2014.
 
 
Results of Operations

The following is a summary of the Company’s operation results for the three and nine months ended September 30, 2015 and 2014:

   
Three Months ended September 30,
   
Nine Months ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited)
   
(Unaudited)
 
Total revenues
 
$
-
   
$
15,044
   
$
-
   
$
16,918
 
Total cost of revenues
   
-
     
20,308
     
-
     
20,308
 
Gross profit (loss)
   
-
     
(5,264
)
   
-
     
(3,390
)
Total operating expenses
   
(313,355
)
   
(716,100
)
   
(924,187
)
   
(1,824,111
)
Total other expense
   
(75,186
)
   
(253,305
)
   
(304,906
)
   
(405,266
)
Net loss
 
$
(388,541
)
 
$
(974,669
)
 
$
(1,229,093
)
 
$
(2,232,767
)

Operating expenses decreased by about $403,000 and $900,000 for the three and nine months ended September 30, 2015 and 2014, which was due to the decrease of $403,000 and $900,000 in general and administrative expenses.  During the three and nine months ended September 30, 2015 and 2014, general and administrative expenses decreased was due to the decrease of about $308,000 and $212,000 in share-based compensation, $16,000 and $64,000 in payroll expense, $46,000 and $204,000 in professional fees, and $33,000 and $420,000 in equipment and repair and maintenance for the refinery operations at the Carson Hill site, respectively.

Other expenses decreased by about $100,000 during the nine months ended September 30, 2015 and 2014 despite of about $96,000 increase in interest expenses due to about $160,000 decrease in interest expenses for the amortization of debt discount and $36,000 decrease in loss on disposal of assets.  During the three months ended September 30, 2015 and 2014, other expenses decreased by about $178,000 due to about $164,000 decrease in interest expenses for the amortization of debt discount and $36,000 decrease in loss on disposal of assets, despite of about $22,000 increase in interest expenses for notes payable.

Liquidity and Capital Resources

As of September 30, 2015 and December 31, 2014, the Company had a total of $766,032 and $940,024 in assets including $9,388 and $64,832 of cash, respectively.  Decrease of about $174,000 in total assets was due to $100,000 increase in accumulated depreciation, $55,000 decrease in cash and the $27,000 decrease in other receivables, which is offset by the $8,000 increase in prepaid expenses for the first nine months of 2015.  The Company also had $3,326,292 and $2,544,660 current liabilities as of September 30, 2015 and December 31, 2014, respectively. Increase of about $781,000 in total current liabilities was mainly due to the increase of $857,000 and $208,000 in convertible notes and accrued liabilities, and the decrease of $68,000, $50,000 and $166,000 in accounts payable, short-term note payable and related party advance, respectively.
 
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2015 and 2014:

   
2015
   
2014
 
   
(Unaudited)
 
Net Cash Used In Operating Activities
 
$
(598,306
)
 
$
(1,407,153
)
Net Cash Used In Investing Activities
   
(665
)
   
(487,798
)
Net Cash Provided By Financing Activities
   
543,581
     
1,887,383
 
Effect Of Exchange Rate On Cash
   
(54
   
(2,361
)
Net Decrease In Cash
 
$
(55,444
 
$
(9,929

Our principal sources of liquidity are our cash and the cash flow provided by the shareholder advances and debt and equity financing.  We believe that further debt and equity financing is needed to satisfy our anticipated cash requirements through the next 12 months.

Total cash decreased by about $55,000 before the effect of exchange rate was mainly due to about $598,000, $140,000 and $167,000 of cash used for funding the operations, repayment of debts and repayments of shareholder advances, respectively, and $850,000 of cash provided by convertible note issuance during the nine months ended September 30, 2015.
 
 
Critical Accounting Policies

There have been no material changes in the critical accounting policies since December 31, 2014.
 
Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3.             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
 
Item 4.             CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of September 30, 2015.   Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared.  Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are ineffective as of September 30, 2015.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2015,  that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
PART II — OTHER INFORMATION

Item 1.             LEGAL PROCEEDINGS

On April 20, 2015, Tons Per Hour, Inc. filed a breach of contract complaint against the Company’s subsidiary, Oro East Mariposa, LLC for approximately $25,000. The complaint was filed in the Superior Court of California, County of Placer, Case Number SCV0036008. Oro East Mariposa filed its Answer on or about June 12, 2015. The disposition date is scheduled for April 20, 2016. A mandatory settlement conference is scheduled for June 17, 2016 and the civil trial conference for June 24, 2016. The trial commencement date is tentatively scheduled for July 5, 2016.
 
Item 1A.          RISK FACTORS
 
As a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act), the Company is not required to provide information required by this Item 1A.

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

None.

Item 3.             DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.             MINE SAFETY DISCLOSURES

None.

Item 5.             OTHER INFORMATION

None. 
 
Item 6.             EXHIBITS

(a)  Exhibits required by Item 601 of Regulation SK. 
 
Exhibit
 
Description
3.1.1
 
Certificate of Incorporation (1)
3.1.2
 
Certificate of Amendment to Certificate of Incorporation (2)
3.2
 
Bylaws (1)
31.1
 
31.2
 
32.1
 
101.INS
 
XBRL Instance Document *
101.SCH
 
XBRL Taxonomy Extension Schema Document. *
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB
 
XBRL Taxonomy Extension  Labels Linkbase Document *
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document *

(1)  Filed and incorporated by reference to the Company’s Registration Statement on Form 10-SB (File No. 000-53136), as filed with the Securities and Exchange Commission on March 19, 2008.

(2)  Filed and incorporated by reference to the Company’s Form 8-K (File No. 000-53136), as filed with the Securities and Exchange Commission on June 17, 2014.

*           Filed herewith
 

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 13, 2015
 
 
ORO EAST MINING, INC.
              (Registrant)
 
       
 
By:
/s/ Tian Q. Chen
 
 
Name:  Tian Q. Chen
Title:    Chief Executive Officer
 
(Principal Executive Officer and Principal
Accounting and Financial Officer)

 
 
 
 
Exhibit
 
Description
3.1.1
 
Certificate of Incorporation (1)
3.1.2
 
Certificate of Amendment to Certificate of Incorporation (2)
3.2
 
Bylaws (1)
31.1
 
31.2
 
32.1
 
101.INS
 
XBRL Instance Document *
101.SCH
 
XBRL Taxonomy Extension Schema Document. *
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB
 
XBRL Taxonomy Extension  Labels Linkbase Document *
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document *

(1)  Filed and incorporated by reference to the Company’s Registration Statement on Form 10-SB (File No. 000-53136), as filed with the Securities and Exchange Commission on March 19, 2008.

(2)  Filed and incorporated by reference to the Company’s Form 8-K (File No. 000-53136), as filed with the Securities and Exchange Commission on June 17, 2014.
 
*           Filed herewith
 
 
 
 
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