Attached files
| file | filename |
|---|---|
| EX-31.2 - EX 31.2 - LKA GOLD Inc /DE/ | exhibitthirtyonetwo.htm |
| EX-31.1 - EX 31.1 - LKA GOLD Inc /DE/ | exhibitthirtyoneone.htm |
| EX-32 - EX 32 - LKA GOLD Inc /DE/ | exhibitthirtytwo.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File No. 000-17106
LKA GOLD INCORPORATED
(Exact name of registrant as specified in its charter)
|
Delaware
|
91-1428250
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|
incorporation or organization)
|
3724 47th Street Ct. N.W.
Gig Harbor, Washington 98335
(Address of principal executive offices)
(253) 514-6661
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: November 14, 2015 – 19,165,152 shares of common stock.
- 1 -
PART I
The Financial Statements of LKA Gold Incorporated, a Delaware corporation (the “Registrant,” the “Company” or “LKA”) required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
- 2 -
LKA GOLD INCORPORATED
Consolidated Balance Sheets
(Unaudited)
ASSETS
|
CURRENT ASSETS
|
||||||||
|
September 30,
2015
|
December 31,
2014
|
|||||||
|
Cash
|
$ | 16,039 | $ | 698,745 | ||||
|
Accounts receivable
|
55,510 | 203,645 | ||||||
|
Total Current Assets
|
71,549 | 902,390 | ||||||
|
FIXED ASSETS
|
||||||||
|
Land, equipment and mining claims
|
849,140 | 811,085 | ||||||
|
Accumulated depreciation
|
(351,308 | ) | (327,705 | ) | ||||
|
Total Fixed Assets, Net of Accumulated Depreciation
|
497,832 | 483,380 | ||||||
|
OTHER NON-CURRENT ASSETS
|
||||||||
|
Reclamation bonds
|
123,597 | 123,597 | ||||||
|
TOTAL ASSETS
|
$ | 692,978 | $ | 1,509,367 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
CURRENT LIABILITIES
|
||||||||
|
Accounts payable
|
$ | 215,099 | $ | 278,354 | ||||
|
Accounts payable – related party
|
14,708 | 6,533 | ||||||
|
Note payable
|
10,000 | 10,000 | ||||||
|
Accrued wages and advances payable to officer
|
101,067 | 76,067 | ||||||
|
Total Current Liabilities
|
340,874 | 370,954 | ||||||
|
NON-CURRENT LIABILITIES
|
||||||||
|
Asset retirement obligation
|
116,540 | 112,876 | ||||||
|
Total Liabilities
|
457,414 | 483,830 | ||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Preferred stock; $0.001 par value, 50,000,000 shares authorized, 0 and
0 shares issued and outstanding, respectively
|
- | - | ||||||
|
Common stock, $0.001 par value, 50,000,000 shares authorized,
19,165,152 and 19,165,152 shares issued and 19,121,528 and 19,121,528
shares outstanding, respectively
|
19,165 | 19,165 | ||||||
|
Additional paid-in capital
|
17,963,315 | 17,963,315 | ||||||
|
Treasury stock; 43,624 and 43,624 shares at cost, respectively
|
(86,692 | ) | (86,692 | ) | ||||
|
Accumulated deficit
|
(17,660,224 | ) | (16,870,251 | ) | ||||
|
Total Stockholders' Equity
|
235,564 | 1,025,537 | ||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 692,978 | $ | 1,509,367 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
- 3 -
LKA GOLD INCORPORATED
Consolidated Statements of Operations
(Unaudited)
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
|||||||||||||
|
REVENUES
|
||||||||||||||||
|
Sales - precious metals
|
$ | 54,515 | $ | 232,563 | $ | 170,500 | $ | 673,646 | ||||||||
|
EXPLORATION COSTS
|
88,831 | 213,484 | 670,629 | 538,757 | ||||||||||||
|
GROSS MARGIN (DEFICIT)
|
(34,316 | ) | 19,079 | (500,129 | ) | 134,889 | ||||||||||
|
OPERATING EXPENSES
|
||||||||||||||||
|
General and administrative
|
25,299 | 65,580 | 103,893 | 149,391 | ||||||||||||
|
Officer salaries
|
37,500 | 37,500 | 112,500 | 112,500 | ||||||||||||
|
Professional and consulting
|
23,343 | 12,247 | 72,269 | 239,033 | ||||||||||||
|
Total Operating Expenses
|
86,142 | 115,327 | 288,662 | 500,924 | ||||||||||||
|
OPERATING LOSS
|
(120,458 | ) | (96,248 | ) | (788,791 | ) | (366,035 | ) | ||||||||
|
OTHER EXPENSE
|
||||||||||||||||
|
Interest expense, net
|
396 | 1,637 | 1,182 | 5,854 | ||||||||||||
|
NET LOSS
|
$ | (120,854 | ) | $ | (97,885 | ) | $ | (789,973 | ) | $ | (371,889 | ) | ||||
|
BASIC NET LOSS PER SHARE
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.03 | ) | ||||
|
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
|
19,165,152 | 14,113,743 | 19,165,152 | 13,201,892 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
- 4 -
LKA GOLD INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)
|
For the Nine Months Ended
September 30,
|
||||||||
|
2015
|
2014
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net loss
|
$ | (789,973 | ) | $ | (371,889 | ) | ||
|
Items to reconcile net loss to net cash used by operating activities:
|
||||||||
|
Accretion of asset retirement obligation
|
3,664 | 3,406 | ||||||
|
Depreciation and amortization
|
23,603 | 26,924 | ||||||
|
Common stock and warrants issued for services
|
- | 1,684 | ||||||
|
Common shares issued for services
|
- | 181,909 | ||||||
|
Common shares issued for related party expenses
|
- | 9,125 | ||||||
|
Changes in operating assets and liabilities
|
||||||||
|
(Increase) decrease in accounts receivable
|
148,135 | (33,939 | ) | |||||
|
Decrease in accounts payable and accounts payable – related party
|
(55,080 | ) | (188,899 | ) | ||||
|
Increase (decrease) in accrued expenses
|
25,000 | (10,889 | ) | |||||
|
Decrease in asset retirement obligation
|
- | (18,975 | ) | |||||
|
Net Cash Used in Operating Activities
|
(644,651 | ) | (401,543 | ) | ||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
Purchase of fixed assets
|
(38,055 | ) | (4,000 | ) | ||||
|
Restricted cash
|
- | 42,907 | ||||||
|
Net Cash Provided by (Used in) Investing Activities
|
(38,055 | ) | 38,907 | |||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
Common stock issued for cash
|
- | 1,500,000 | ||||||
|
Cash paid for common stock offering costs
|
- | (162,044 | ) | |||||
|
Payment of preferred stock dividends
|
- | (3,107 | ) | |||||
|
Net Cash Provided by Financing Activities
|
- | 1,334,849 | ||||||
|
INCREASE (DECREASE) IN CASH
|
(682,706 | ) | 972,213 | |||||
|
CASH AT BEGINNING OF PERIOD
|
698,745 | 8,740 | ||||||
|
CASH AT END OF PERIOD
|
$ | 16,039 | $ | 980,953 | ||||
|
CASH PAID FOR:
|
||||||||
|
Interest
|
$ | 900 | $ | 900 | ||||
|
Income taxes
|
$ | - | $ | - | ||||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
|
Common stock issued for accrued payables, related party
|
$ | - | $ | 36,500 | ||||
|
Common stock issued for finders fees
|
$ | - | $ | 138,300 | ||||
|
Common stock proceeds remitted for future stock distribution rights
|
$ | - | $ | 300,000 | ||||
|
Common stock issued for conversion of preferred stock
|
$ | - | $ | 44 | ||||
|
Common stock issued for warrant settlement fees
|
$ | - | $ | 6,080 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
- 5 -
LKA GOLD INCORPORATED
Notes to the Unaudited Consolidated Financial Statements
September 30, 2015
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
LKA Gold Incorporated (Formerly LKA International, Inc.) (“LKA” or the “Company”) is currently engaged in efforts to expand mine production and continues to seek additional investment opportunities.
The accompanying unaudited condensed consolidated financial statements have been prepared by LKA pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with LKA’s most recent audited financial statements. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2 - RELATED PARTY TRANSACTIONS
Related Party Debt – Office Space
LKA pays a company owned by an officer and shareholder $1,500 per month for office rent and expenses. The affiliated company (Abraham & Co., Inc. a FINRA member and registered investment advisor) also executes LKA’s securities transactions and manages its investment portfolio. LKA owed Abraham & Co. $12,000 and $6,000 as of September 30, 2015 and December 31, 2014, respectively.
Related Party Debt – Accounts and Wages Payable
At September 30, 2015 and December 31, 2014, LKA owes $2,708 and $533, respectively, for purchases made on the personal credit card of LKA’s President, Kye Abraham. Additionally, LKA owed Kye Abraham $101,067 and $76,067 in unpaid salary at September 30, 2015 and December 31, 2014, respectively.
Convertible Debentures
On September 29, 2015, LKA issued two convertible debentures, each in the amount of $125,000, or a total of $250,000 to members of the Koski family, the Company’s largest shareholders. Principal on the convertible debentures is due September 29, 2018. The convertible debentures accrue interest at 7.5% and are convertible at any time into shares of LKA common stock at $0.50 per share. Interest is due on a semi-annual basis and LKA is required to retain a reserve amount of the proceeds to pay the first two semi-annual interest payments, which, if the debentures are converted within one year, will be paid to the convertible debenture holders. Proceeds from the sale of convertible debentures to the Koskis, plus additional debentures issued in the amount of $50,000 were received in October, 2015.
NOTE 3 - SIGNIFICANT EVENTS
During January through September 2015, LKA delivered a total of approximately 118.29 dry short tons of gold enriched vein material for processing at a net revenue value of $170,500. At September 30, 2015 and December 31, 2014, LKA had metal sales receivables of $55,510 and $203,645, respectively.
- 6 -
LKA GOLD INCORPORATED
Notes to the Unaudited Consolidated Financial Statements
September 30, 2015
NOTE 3 - SIGNIFICANT EVENTS (CONTINUED)
On July 9, 2015, LKA entered into an Exploration Agreement & Option (the “Agreement”) with Kinross Gold U.S.A., Inc. for the purpose of expanding the Golden Wonder Mine exploration beyond LKA’s active workings. The Agreement, amongst its other provisions, grants Kinross a five-year exclusive right to explore, and if successful, develop any mineral resource(s) containing 50,000 or more ounces of gold on LKA’s properties above and adjacent to the Golden Wonder Mine located near Lake City, Colorado. If such a resource, or multiple resources, is discovered, LKA will have the option to enter into a joint venture with Kinross for the purpose of developing such resource(s) by reimbursing 40.25% of Kinross’ exploration expenses in return for a 35% interest in the joint venture. If a joint venture is formed, LKA’s contribution will also include all of LKA’s Golden Wonder properties.
During the five-year exploration period, Kinross will, but is not obligated to, conduct exploration, at its own expense, while LKA will retain the exclusive right to continue exploration and development of any resources within a “Carve-Out Area” which is LKA’s current area of operation.
|
|
NOTE 4 - NOTIFICATION OF POSSIBLE ENVIRONMENTAL REMEDIATION
|
In 2002 the Federal Bureau of Land Management (the "BLM") advised LKA of its desire to extend to the Ute-Ulay Property certain environmental clean-up (“remediation”) activities that it is conducting on neighboring properties that LKA does not own. The BLM commissioned and obtained three engineering evaluation and cost analysis ("EE/CA") studies/reports on the Ute-Ulay and the neighboring public lands in 2002-2006. These EE/CA studies analyzed the current environmental state of the Ute-Ulay property and other properties in the area. The studies identified a large volume of mine tailings and metals loading of shallow ground water, with elevated levels of arsenic, cadmium and lead being present. The BLM’s most recent study, “Value Engineering Study on the Ute Ulay Mine/Mill Site – Final Report” dated January 5, 2006, projected the costs of remediation and property stabilization on the Ute-Ulay property to be approximately $2.1 million. Based upon discussions with Hinsdale County, Colorado officials, Colorado Department of Public Health & Environment Ute-Ulay project supervisor, the Federal Environmental Protection Agency’s (the “EPA”) regional manager, and legal counsel, the actual costs associated with this effort are expected to be approximately $1.2 million; substantially below previous BLM estimates. Under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the EPA may either require a property owner to perform the necessary cleanup or the agencies may perform the work and seek recovery of costs against the property owner and previous owners. While it cannot be determined with absolute certainty until the project is completed, LKA’s status as a “de minimis” participant and the fact that remediation activities are focused on property located largely outside of LKA’s permitted operating area, LKA management expects this project will have a negligible impact on the LKA’s financial condition. Accordingly, pursuant to Generally Accepted Accounting Principles, and all discussions with the above named agencies to date, LKA management believes it is unlikely there will be a material impact to its financial statements and no liability for this project has been recorded as of September 30, 2015. Actual completion of remediation work at the site was completed in late 2013 by the EPA. The EPA has not yet issued its notice of final determination.
NOTE 5- GOING CONCERN
LKA's consolidated financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, LKA has recently accumulated significant losses and has negative working capital. All of these items raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the LKA's ability to continue as a going concern are as follows:
LKA is currently engaged in an intensive exploration program at the Golden Wonder mine with the objective of returning the mine to a producing status. The exploration program, which began in late 2008, has involved
- 7 -
LKA GOLD INCORPORATED
Notes to the Unaudited Consolidated Financial Statements
September 30, 2015
NOTE 5 - GOING CONCERN (CONTINUED)
extensive exploratory mining and drilling for the purpose of identifying possible new production zones within the mine and on the Company’s adjacent property. During this ongoing evaluation period, bulk sampling, through exploratory mining of high-grade structures (extensions of the initial ore zone) has yielded encouraging results and over $5.1 million in precious metals revenues. Until LKA can locate another ore body, no conclusion can be drawn at this time about the commercial viability of the mine.
In order to support continued exploration of the mine, LKA entered into several financing transactions during the years ended December 31, 2014 and 2015. The Company expects to raise additional funding, through financings or the sale of enriched vein material during 2016 to fund the continued exploration of the Golden Wonder mine. If LKA is not successful in the resumption of profitable mine operations, either from commercial or exploratory mining, it may be forced to continue to raise additional equity or debt financing to fund its ongoing obligations or risk ceasing doing business.
There can be no assurance that LKA will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of LKA to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 6 - SUBSEQUENT EVENTS
In October 2015, LKA issued an additional $50,000 in convertible debentures. Principal on the convertible debentures is due October 29, 2018. The convertible debentures accrue interest at 7.5% and are convertible at any time into shares of LKA common stock at $0.50 per share. Interest is due on a semi-annual basis and LKA is required to retain a reserve amount of the proceeds to pay the first two semi-annual interest payments, which, if the debentures are converted within one year, will be paid to the convertible debenture holders. Proceeds from the sale of all debentures issued, amounting to $300,000, was collected in October, 2015.
- 8 -
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, international gold prices, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Results of Operations
For The Three Months Ended September 30, 2015 Compared to The Three Months Ended September 30, 2014
During the three months ended September 30, 2015, we recognized revenue of $54,515 from the sale of gold enriched vein material derived from exploratory mining, compared to $232,563 in the three months ended September 30, 2014. Sales result from our exploration activities at the Golden Wonder mine.
Exploration expenses decreased $124,653, or approximately 58.4%, from $213,484 in the three months ended September 30, 2014, to $88,831 in the three months ended September 30, 2015. The decrease was mainly due to a decrease in contract labor from decreased mining operations.
Professional fees increased by $11,096 during the three months ended September 30, 2015, compared to the three months ended September 30, 2014. The increase is mainly due to payments to consultants for corporate website design.
General and administrative expenses increased by $40,281, or approximately 61.4% in the three months ended September 30, 2015, mainly due to decreases in investor relations expenses during the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
We incurred an operating loss of $120,458 during the three months ended September 30, 2015, as compared to an operating loss of $96,248 in the three months ended September 30, 2014. The $24,210, or approximately 25.2% increase is mainly due to the lack of revenue in the three months ended September 30, 2015, compared to revenue of $232,563 during the three months ended September 30, 2014, as well as the $124,653 decrease in exploration expenses during the three months ended September 30, 2015, compared to the three months ended September 30, 2014.
Interest expense decreased to $396 during the three months ended September 30, 2015, as compared to $1,637 in the three months ended September 30, 2014.
Net loss totaled $120,854, or $0.01 per share, in the three months ended September 30, 2015, compared to a net loss of $97,885, or $0.01 per share in the three months ended September 30, 2014.
For The Nine Months Ended September 30, 2015 Compared to The Nine Months Ended September 30, 2014
During the nine months ended September 30, 2015, we recognized revenue of $170,500 from the sale of gold enriched vein material, compared to $673,646 in the nine months ended September 30, 2014, a decrease of $503,146, or approximately 74.7%.
- 9 -
Exploration expenses increased $131,872, or approximately 24.5%, from $538,757 in the nine months ended September 30, 2014, to $670,629 in the nine months ended September 30, 2015, mainly due to a $185,845 increase in contract labor from increased mine exploration.
Professional fees decreased by $166,764, or approximately 69.8%, mainly due to the recognition of $183,593 in non-cash equity compensation expense to consultants during the nine months ended September 30, 2014.
General and administrative expenses decreased by $45,498, or approximately 30.5% in the nine months ended September 30, 2015, mainly due to a $40,444 decrease in investor relations expenses during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
We incurred an operating loss of $788,791 during the nine months ended September 30, 2015, as compared to an operating loss of $366,035 in the nine months ended September 30, 2014. The $422,756, or approximately 115.5%, increase is mainly due to the $131,872 increase in exploration costs and $503,146 decrease in revenue, partially offset by the $212,262 decrease in operating expenses, during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
Interest expense decreased to $1,184 during the nine months ended September 30, 2015, as compared to $5,856 in the nine months ended September 30, 2014.
Net loss totaled $789,973, or $0.04 per share, in the nine months ended September 30, 2015, compared to a net loss of $371,889, or $0.03 per share, in the nine months ended September 30, 2014.
Liquidity
Current assets at September 30, 2015 totaled $71,549. As of that date, we had $16,039 in cash and $55,510 in accounts receivable, as compared to $698,745 in cash and $203,645 in accounts receivable at December 31, 2014.
During the nine months ended September 30, 2015, our operating activities used net cash of $644,651, compared to $401,543 in the comparable 2014 period. Investing activities used cash of $38,055 for the purchase of fixed assets during the period ended September 30, 2015, compared to providing cash of $38,907 from changes in restricted cash in the comparable 2014 period. Financing activities did not provide any cash during the nine months ended September 30, 2015, compared to $1,334,849 cash provided by financing activities during the nine months ended September 30, 2014. The increase in cash provided by financing activities is mainly due to the sale of common stock for net cash proceeds of $1,337,956 during the three months ended September 30, 2014.
At September 30, 2015, the Company had a working capital deficit of $269,325, as compared to $531,436 working capital at December 31, 2014.
Focus Shift
LKA has temporarily shifted its focus from exploratory mining if favor of a more cost effective drilling program to locate additional high-grade targets within the Carve-Out area. The Company intends to follow up the underground drilling program, conducted earlier this year, with a surface drilling program which will be undertaken upon evaluation of a detailed Kinross report (geological evaluation) of certain surface features found on LKA’s mining claims. Kinross is expected to complete and provide LKA with this report in November, 2015. LKA expects to resume exploratory mining operations upon locating new high-grade targets.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
- 10 -
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2015, our disclosure controls and procedures were not effective as the Company lacks appropriate segregation of duties and has an insufficient number of employees responsible for the accounting and financial reporting functions. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in internal control over financial reporting
Our management, with the participation of the chief executive officer and chief financial officer, has concluded that there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
None; not applicable.
Item 1A. Risk Factors.
Not required.
None; not applicable
None; not applicable
None, not applicable.
During the three months ended September 30, 2015, there were no material changes to the procedures by which security holders may recommend nominees to the Registrant’s Board of Directors.
- 11 -
|
31.1
31.2
32
|
Certification of Kye Abraham Pursuant to Section 302 of the Sarbanes-Oxley Act.
Certification of Nanette Abraham Pursuant to Section 302 of the Sarbanes-Oxley Act.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document*
|
|
101.PRE.
|
XBRL Taxonomy Extension Presentation Linkbase*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema*
|
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
LKA GOLD INCORPORATED
|
Date:
|
November 16, 2015
|
By:
|
/s/Kye Abraham
|
|
|
Kye Abraham, President, Chairman of the Board and Director
|
||||
|
Date:
|
November 16, 2015
|
By:
|
/s/Nanette Abraham
|
|
|
Nanette Abraham, Secretary, Treasurer and Director
|
- 12 -