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EX-31.2 - Nevada Canyon Gold Corp.ex31-2.htm
EX-31.1 - Nevada Canyon Gold Corp.ex31-1.htm

 

 

  

UNITED STATES

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, 2016

or

 

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

 

For the transition period from ______ to ______

 

Commission File No. 333-196075

 

NEVADA CANYON GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada

(State or other Jurisdiction of

Incorporation or Organization)

 

316 California Avenue, Suite 543

Reno, NV

(Address of Principal Executive Offices)

46-5152859

(I.R.S. Employer

Identification No.)

 

 

89509

(Zip Code)

 

Registrant’s telephone number, including area code: (888) 909-5548

 

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 preceding12 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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 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 file,” “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 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 Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [  ] No [  ]

 

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: As of November 14, 2016, the number of shares outstanding of the issuer’s sole class of common stock, par value $0.0001 per share, is 44,050,000.

 

 

 

 
 

 

table of contents

 

Part I – FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Balance Sheet
Statements of Operations 4
(Unaudited)  
Statements of Cash Flow 5
(Unaudited)  
Notes to the Interim Financial Statements 6
(Unaudited)  
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations 9
Results of Operations 11
Three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015 11
Off-Balance Sheet Arrangements 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Item 4. Controls and Procedures 14
PART II — OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales 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 Statements

 

Nevada Canyon Gold Corp.

(Formerly Tech Foundry Ventures, Inc.)

Balance Sheets

 

   September 30, 2016   December 31, 2015 
   (unaudited)     
ASSETS          
Current Assets          
Cash  $107,730   $39,027 
Prepaid expenses   12,782    910 
    120,512    39,937 
Mineral property interest   65,000    65,000 
TOTAL ASSETS  $185,512   $104,937 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
Current Liabilities          
Accounts payable and accrued liabilities  $8,200   $1,406 
Related party advances   93,000    63,000 
Note payable   -    100,425 
    101,200    164,831 
           
Stockholders' Equity (Deficit)          
Preferred Stock: Authorized 10,000,000 preferred shares, $0.0001 par, none issued and outstanding as of September 30, 2016 and December 31, 2015   -     -  
Common Stock: Authorized 100,000,000 common shares, $0.0001 par, 44,050,000 issued and outstanding as of September 30, 2016 and 219,500,000 issued and outstanding as of
December 31, 2015
   4,405    21,950 
Additional paid in capital   475,695    75,150 
Accumulated deficit   (395,788)   (156,994)
    84,312    (59,894)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $185,512   $104,937 

 

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

 

  3 
 

 

NEVADA CANYON GOLD CORP.

(Formerly Tech Foundry Ventures, Inc.)

Statements of Operations

(Unaudited)

 

    For the three months ended   For the nine months ended 
    September 30, 2016   September 30, 2015   September 30, 2016   September 30, 2015 
                  
Revenue   $-   $3,000   $-   $4,000 

Operating expenses 

                    
Exploration expenses    114,329    -    153,453    - 
General and administrative expenses    22,986    203    37,583    4,452 
Professional fees    3,924    8,125    30,101    27,214 
Transfer agent and filing fees    4,024    3,565    9,576    17,748 
     (145,263)   (11,893)   (230,713)   (49,414)
                      
Other items                     
Accrued interest recovery (expense)    2,412    -    (81)   - 
Share-based payment    -    -    (8,000)   - 
                      
Net and comprehensive loss   $(142,851)  $(8,893)  $(238,794)  $(45,414)
                      
Net loss per common share - basic and diluted   $(0.00)  $(0.00)  $(0.00)  $(0.00)
Weighted average number of common shares outstanding                     
Basic and diluted    44,050,000    218,500,000    103,828,284    218,493,590 

 

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

 

  4 
 

 

NEVADA CANYON GOLD CORP.

(Formerly Tech Foundry Ventures, Inc.)

Statements of Cash Flow

(Unaudited)

 

   For the nine months ended
September 30, 2016
   For the nine months ended
September 30, 2015
 
OPERATING ACTIVITIES          
Cash flows used in operating activities          
   Net loss  $(238,794)  $(45,414)
Adjustment to reconcile net loss to net cash used by operating activities:          
Accrued interest expense   81    - 
Share-based payment   8,000    - 
Changes in operating assets and liabilities:          
Accounts payable and accrued liabilities   6,794    (9,517)
Prepaid expenses   (11,872)   - 
Net cash used by operating activities   (235,791)   (54,931)
           
FINANCING ACTIVITIES          
Subscription deposits   -    (3,500)
Undeposited funds   -    8,500 
Common stock   375,000    3,500 
Related party advances   30,000    - 
Repayment of note payable   (100,506)   - 
Net cash provided by financing activities   304,494    8,500 
           
Net increase (decrease) in cash   68,703    (46,431)
Cash, at beginning   39,027    81,600 
Cash, at end  $107,730   $35,169 
           
Supplemental cash flow information:          
Cash paid for interest  $506   $- 
Cash paid for income taxes  $-   $- 
           
Significant non-cash transactions:          
Common stock issued for corporate name  $8,000   $- 

 

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

 

  5 
 

 

NEVADA CANYON GOLD CORP.

(Formerly Tech Foundry Ventures, Inc.)

Notes to the Interim Financial Statements

(Unaudited) 

For the three and nine months ended September 30, 2016 and 2015

 

NOTE 1 - NATURE OF BUSINESS

 

Nevada Canyon Gold Corp. (formerly Tech Foundry Ventures, Inc.) (the “Company”) was incorporated under the laws of the state of Nevada on February 27, 2014. On July 6, 2016, the Company changed its name from Tech Foundry Ventures, Inc. to Nevada Canyon Gold Corp.

 

On April 28, 2016, the Company split its common stock on a 10:1 basis. All shares and per share amounts have been retroactively restated to account for the split.

 

Going Concern

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America (“US GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has only recently begun its exploration operations and has not generated or realized any revenues from these business operations. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds, and/or a private placement of common stock.

 

NOTE 2 - BASIS OF PRESENTATION

 

The unaudited interim financial statements of the Company have been prepared in accordance with US GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The unaudited interim financial statements should be read in conjunction with those financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

 

Recent Accounting Pronouncements

 

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

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Amounts due to related parties at September 30, 2016 and December 31, 2015:

 

   September 30, 2016   December 31, 2015 
Advances due to the Chief Executive Officer (“CEO”)  $51,000   $21,000 
Advances due to a director   21,000    21,000 
Advances due to a major shareholder   21,000    21,000 
Related party advances  $93,000   $63,000 

 

  6 
 

  

As at September 30, 2016, the Company’s three shareholders had advanced $93,000 (December 31, 2015 - $63,000) to fund working capital expenses. These advances are unsecured and do not carry an interest rate or repayment terms.

 

On April 4, 2016, each of the Company’s three shareholders tendered 60,000,000 shares (6,000,000 pre-split shares) of common stock for cancellation. As a result, a total of 180,000,000 shares of common stock were cancelled and returned to the Company’s treasury to a status of authorized but unissued. The cancelling shareholders provided a release for the benefit of the Company releasing the Company from any potential loss resulting from their cancellation.

 

During the nine month period ended September 30, 2016, the Company issued 800,000 shares with a fair value of $8,000 to Nevada Canyon Gold Corporation, a Company with the President and CEO in common with the Company, to purchase its corporate name, domain name, and all related content (Note 6).

 

During the year ended December 31, 2015, the Company entered into a definitive agreement with Nevada Canyon Gold Corporation, a company with the President and CEO in common with the Company (Note 4).

 

NOTE 4 – MINERAL PROPERTY INTEREST

 

On December 17, 2015, the Company entered into a definitive agreement with Nevada Canyon Gold Corporation, a Nevada corporation (“NCG”), to acquire all of NCG’s rights, titles and interests in and into an exploration agreement with an option to form a joint venture with Walker River Resources Corp., a Canadian public company (“WRR”), dated September 15, 2015 (the “Agreement”). WRR owns a 100% undivided interest in and to the Lapon Canyon Gold Property, containing the Lapon Canyon claims, the subject of the Agreement.

 

The Agreement does not grant the Company an interest in or to the Lapon Canyon claims, or any equity interest in WRR, but rather, grants the Company the right to earn up to an undivided 50% interest in the Lapon Canyon claims by incurring expenditures of $500,000, over a two-year period, in exploration expenses in a work program established and operated by WRR on the Lapon Canyon claims and, thereafter, grants the Company an option to enter into a joint venture with WRR for further exploration and development of the Lapon Canyon claims. The Agreement also grants the Company the first right of refusal to acquire an additional 20% interest in the Lapon Canyon claims by the expenditure of additional funds and performance of additional tasks, all related to the joint venture.

 

Full consideration for all rights in and to the Agreement consisted of the following: payment of $65,000 by the Company to NGC, consisting of an initial cash payment of $25,000 deposit, a cash payment of $30,000 and the balance of $10,000 paid through the issuance of 1,000,000 restricted common shares of the Company issued to NGC at a price of $0.01. All consideration had been fully paid as at December 31, 2015.

 

During the nine month period ended September 30, 2016, the Company incurred exploration expenses totaling $153,453 (2015 – $Nil) on the Lapon Canyon claims.

 

NOTE 5 – NOTE PAYABLE

 

During the year ended December 31, 2015, the Company borrowed $100,000 (the “Loan”). The Loan bore an interest rate of 5%, with all outstanding principal and interest due on July 31, 2016. On August 1, 2016, the Company renegotiated the terms of the Loan, extending the maturity date to August 2, 2016, and reducing the interest rate to 0.75%. The Company repaid the Loan and accrued interest totaling $100,506 in accordance with the new terms on August 2, 2016. Accordingly, the Company recognized a recovery of interest expense totaling $2,837 as a result of the reduced interest rate.

 

  7 
 

 

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

The Company was formed with one class of common stock, $0.0001 par value and is authorized to issue 100,000,000 common shares, and one class of preferred stock, $0.0001 par value and is authorized to issue 10,000,000 preferred shares. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they chose to do so, elect all of the directors of the Company.

 

On April 28, 2016, the Company split its common stock on a 10:1 basis. All shares and per share amounts have been retroactively restated to account for the split. The outstanding share capital of the Company as at December 31, 2015, exceeded the authorized share capital as a result of the forward split, however, prior to the stock split, on April 4, 2016, the Company cancelled 180,000,000 common shares held by three founding shareholders of the Company. As a result, the actual common shares outstanding at December 31, 2015, did not exceed those authorized.

 

The stock split did not affect the par value of the Company’s common stock. As a result, the stated capital on the Company’s balance sheet attributable to the Company’s common stock was increased proportionately based on the stock split ratio, and the additional paid-in capital account was credited with the amount by which the stated capital was increased.

 

On March 30, 2016, the Company issued 800,000 shares with a total fair value of $8,000 to purchase the intangible assets of NCG which included its corporate name and its domain name and all related content, which was expensed and included in corporate costs.

 

On April 4, 2016, each of the Company’s three shareholders tendered 60,000,000 shares (6,000,000 pre-split shares) of common stock for cancellation (Note 3). As a result, a total of 180,000,000 shares of common stock were cancelled and returned to the Company’s treasury to a status of authorized but unissued. The cancelling shareholders provided a release for the benefit of the Company releasing the Company from any potential loss resulting from their cancellation.

 

On June 21, 2016, the Company completed its private placement offering by issuing to the subscribers a total of 3,750,000 shares of $0.0001 par value restricted common stock at $0.10 per share for total proceeds of $375,000.

 

  8 
 

 

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

 

Forward Looking Statements

 

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.

 

Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K.

 

Examples of forward looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our future products, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:

 

the risks of a development stage company;
management’s plans, objectives and budgets for its future operations and future economic performance;
capital budget and future capital requirements;
meeting future capital needs;
our dependence on management and the need to recruit additional personnel;
limited trading for our common stock, if listed or quoted
the level of future expenditures;
impact of recent accounting pronouncements;
the outcome of regulatory and litigation matters; and
the assumptions described in this report underlying such forward-looking statements. Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including:
those described in the context of such forward-looking statements;
future product development and marketing costs;
timely development and acceptance of our consulting services;
the markets of our domestic operations;
the impact of competitive products and pricing;
the political, social and economic climate in which we conduct operations; and
the risk factors described in other documents and reports filed with the Securities and Exchange Commission, including our Registration Statement on Form S-1/A (SEC File No. 333-196075).

 

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.

 

  9 
 

 

The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited condensed interim financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited condensed interim financial statements.

 

In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Nevada Canyon Gold Corp., a Nevada corporation, unless the context requires otherwise.

 

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three and nine months ended September 30, 2016 and 2015. You should refer to the Financial Statements and related Notes in conjunction with this discussion.

 

General

 

We are an exploration stage Company. We have only recently begun our exploration operations and have not generated or realized any revenues from these business operations.

 

We are a party to an Exploration Agreement (the “Agreement”) with Option to form a Joint Venture with Walker River Resources Corp. (“WRR”) on its wholly-owned Lapon Canyon Gold Project (“Lapon Canyon Project”, or “the Property”) located approximately 40 miles southeast of Yerington, Nevada. The Agreement does not grant us an interest in or to the Property, or any equity interest in WRR, but rather, grants us the right to earn up to an undivided 50% interest in the Property by incurring eligible expenditures of $500,000 (over a two-year period) in exploration and other expenses required to carry out a work program established and operated by WRR on the Property (the “Eligible Expenses”). Thereafter, the Agreement grants us an option to enter into a joint venture with WRR for further exploration and development of the Property.

 

Even if we complete our current exploration programs and are successful in identifying a mineralized deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit, called a reserve.

 

We will be conducting exploration of the Property with what we anticipate is sufficient funding for approximately one year of operations. We are not going to buy or sell any significant equipment during the next twelve months. If we find mineralized materials in the Property, we have no intention to develop the reserves ourselves, but rather, will attempt to find a mining operations company to whom we can sell the property or with whom we can enter into a business arrangement to put the ore deposit into operation.

 

We do not intend to hire employees at this time. All of the work on the Property will be conducted by WRR, who will be responsible for surveying, geology, engineering, exploration, and excavation, and we will be responsible for paying all of the expenses incurred in such activities. Walker River will be solely responsible for conducting the exploration stage operations, and we will pay the expense of such operations, all devoted to exploration. Once we have paid $250,000 in Eligible Expenses, we will have earned our 25% in the Property, and once we have paid an additional $250,000, we will have earned an additional 25% interest, for a total 50% in the Property. On October 15, 2016, we have incurred required $250,000 in Eligible Expenses, and earned the 25% interest to the Property.

 

One of our directors will be present on the Property as a representative for the Company during most exploration operations. If we hire an independent geologist, he/she will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.

 

Mineral property exploration is typically conducted in phases. We intend to follow our consultant’s recommendations and begin drilling to determine if there is sufficient mineralization on the property to warrant continued exploration and development activities. We estimate the cost of the drilling, shipping samples, as well as geological mapping, rock chip sampling, grid establishment, hiring geologists, and soil sampling, to be approximately $500,000, which is the amount we expect to pay in order to acquire a 50% interest in the Property.

 

After the completion of the first phase of the exploration program, we will review the results and conclusions and evaluate the advisability of additional exploration work on the Property.

 

If we are unable to complete any phase of exploration because we don’t have enough funds, we will cease activities until we raise more money. At the present time, we have made arrangements to raise the additional funds required to do advanced exploration but not to place our Property into production. If we need additional cash and cannot raise it,we will either have to suspend activities until we do raise the cash, or cease activities entirely. Other than as described in this paragraph, we have no financing plans.

 

  10 
 

 

Critical Accounting Policy and Estimates

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our unaudited condensed interim financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our unaudited condensed interim financial statements include estimates as to the appropriate carrying value of certain assets and liabilities, which are not readily apparent from other sources.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited interim financial statements for the three and nine months ended September 30, 2016 and 2015, together with notes thereto, which are included in this Quarterly Report on Form 10-Q, as well as our most recent audited financial statements on Form 10-K for the year ended December 31, 2015.

 

Results of Operations

 

Three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015

 

   Three months  ended September 30,   Changes between    Nine months  ended September 30,   Changes between  
   2016   2015   the periods   2016   2015   the periods 
                         
Revenue  $-   $3,000   $(3,000)  $-   $4,000   $(4,000)
Operating expenses                              
Exploration expenses   114,329    -    114,329    153,453    -    153,453 
General and administrative expenses   22,986    203    22,783    37,583    4,452    33,131 
Professional fees   3,924    8,125    (4,201)   30,101    27,214    2,887 
Transfer agent and filing fees   4,024    3,565    459    9,576    17,748    (8,172)
Total operating expenses   (145,263)   (11,893)   (133,370)   (230,713)   (49,414)   (181,299)
Other items                              
Accrued interest recovery (expense)   2,412    -    2,412    (81)   -    (81)
Share-based payment   -    -    -    (8,000)   -    (8,000)
Net and comprehensive loss  $(142,851)  $(8,893)  $133,958   $(238,794)  $(45,414)  $193,380 

 

Revenues. We had no revenues for the three and nine months ended September 30, 2016. During the comparable period we have recorded $4,000 in consulting fees we received from our consulting agreement with a client. Due to the exploration rather than the production nature of our business, we do not expect to have significant operating revenue in the foreseeable future.

 

Operating expenses. Our operating expenses include exploration expenses, general and administrative expenses, professional fees and transfer agent and filing fees. During the three month period ended September 30, 2016, our operating expenses increased by $133,370, or 1,121%, to $145,263 for the three months then ended, compared to $11,893 for the comparable period in 2015. This change was mainly associated with an exploratory drilling program (the “Exploration Program”) we commenced on the Lapon Canyon claims, which was required under our Agreement with WRR to earn a 50% interest in a joint venture. During the three month period ended September 30, 2016 we recorded $114,329 in exploration expenses directly associated with the Exploration Program.

 

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During the nine month period ended September 30, 2016, our operating expenses increased by $181,299, or 367%, to $230,713 for the nine months ended September 30, 2016 compared to $49,414 for the comparable period in 2015.

 

The most significant year-to-date changes included the following:

 

Our exploration expenses increased by $153,453 or 100%, to $153,453 for the nine months ended September 30, 2016. The increase was due to the exploration expenses associated with the Exploration Program we were required to carry out in order to earn a 50% interest in a joint venture with WWR.
 
General and administrative expenses increased by $33,131, or 744%, to $37,583 for the nine months ended September 30, 2016 compared with $4,452 for the comparable period in 2015. The increase was primarily attributable to an increase in travel and entertainment expenses, as well as investor relation activities and consulting fees.
   
Professional fees increased by $2,887, or 11%, to $30,101 for the nine months ended September 30, 2016 compared with $27,214 for the comparable period in 2015. The increase was associated with increased overall business activity.
   
Transfer agent and filing fees decreased by $8,172, or 46%, to $9,576 for the nine months ended September 30, 2016 compared with $17,748 for the comparable period in 2015. The decrease was primarily attributable to the reduction in transfer agent fees that were previously incurred in engaging the Company’s transfer agent.

 

Net loss. Our net loss increased by $133,958, or 1,506%, to $142,851 for the three months ended September 30, 2016 compared to $8,893 for the comparable period in 2015. The increase was primarily attributable to the operating expenses discussed above, which was in part offset by $2,412 in recovery of interest we accrued on a $100,000 note payable we issued to an arms-length party (“Note Payable”) following our renegotiation of the interest rate and repayment terms of the Note Payable.

 

Our net loss increased by $193,380, or 426%, to $238,794 for the nine months ended September 30, 2016 compared to $45,414 for the comparable period in 2015. The increase was primarily attributable to the operating expenses discussed above plus a one-time $8,000 share-based payment to purchase intangible assets of NCG which included its corporate name and its domain name and all related content, as well as $81 in interest accrued on the Note Payable.

 

Liquidity and Capital Resources.

 

Working capital  September 30, 2016   December 31, 2015 
         
Current assets  $120,512   $39,937 
Current liabilities   101,200    164,831 
Working capital (deficit)  $19,312   $(124,894)

 

As of September 30, 2016, we had a cash balance of $107,730, and working capital of $19,312 with cash flows used in operations totaling $235,791 for the period then ended. During the nine month period ended September 30, 2016, we funded our operations with proceeds from a private placement for gross proceeds of $375,000, and with $30,000 interest-free advances we received from our related parties.

 

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the nine month period ended September 30, 2016. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under these notes and advances payable, or to service our other debt obligations. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources.

 

We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.

 

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Cash Flow

 

  

Nine Months Ended

September 30,

 
   2016   2015 
Cash flows used in operating activities  $(235,791)  $(54,931)
Cash flows provided by financing activities   304,494    8,500 
Net increase (decrease) in cash during the period  $68,703   $(46,431)

 

Net cash used in operating activities: Our net cash used in operating activities increased by $180,860, or 329%, to $235,791 for the nine months ended September 30, 2016, compared with $54,931 for the comparable period in 2015. During the nine months ended September 30, 2016 we used $230,713 to cover our cash operating costs, and to increase our prepaid expenses by $11,872. These uses of cash were offset by increase in our accounts payable of $6,794.

 

During the nine months ended September 30, 2015 we used $45,414 to cover our cash operating costs and $9,517 to decrease our accounts payable.

 

Net cash provided by financing activities: Our net cash provided by financing activities increased by $295,994, or 3,482%, to $304,494 for the nine months ended September 30, 2016 compared with $8,500 for the comparable period in 2015. We received $375,000 in gross proceeds from a private placement for 3,750,000 shares of our common stock at $0.10 per share, which we closed on June 21, 2016. We received $30,000 advance from our CEO and President free of interest and payable on demand.

 

On August 1, 2016, we renegotiated the terms of the Note Payable, extending the maturity date to August 2, 2016, and reducing the interest rate to 0.75%. We repaid the Note Payable and accrued interest totaling $100,506 in accordance with the new terms on August 2, 2016.

 

During the nine months ended September 30, 2015, we received $8,500 in subscriptions to the shares of our common stock.

 

During the nine months ended September 30, 2016 and 2015, we did not have any investing transactions that would have effected our cash flows.

 

Going Concern

 

At September 30, 2016, we had a working capital of $19,312 and cash on hand of $107,730, which is not sufficient enough to carry out our current plan of operation, however we are in the process of trying to procure funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.

 

Income Tax Expense (Benefit)

 

The Company has a prospective income tax benefit resulting from a net operating loss carry forwards that may offset any future operating profit.

 

Impact of Inflation

 

The Company believes that inflation has had a negligible effect on operations over the past quarter.

 

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Capital Expenditures

 

The Company expended no amounts on capital expenditures for the nine months ended September 30, 2016.

 

Unproved Mineral Properties

 

As discussed above, in section “General” of this MD&A, on December 17, 2015, we entered into a definitive agreement (the “Agreement”) with Nevada Canyon Gold Corporation, a Nevada corporation (“NCG”), to acquire all of NCG’s rights, titles and interests in and into an exploration agreement with an option to form a joint venture with Walker River Resources Corp., a Canadian public company (“WRR”), dated September 15, 2015. WRR owns a 100% undivided interest in and to the Lapon Canyon Gold Property, containing the Lapon Canyon claims (“the Property”), which is the subject of the Agreement.

 

The Agreement does not grant us an interest in or to the Property, or any equity interest in WRR, but rather, grants us the right to earn up to an undivided 50% interest in the Property by incurring $500,000 (over a two-year period) in eligible exploration and other expenses required to carry out an Exploration Program established and operated by WRR on the Property (the “Eligible Expenses”). Once we have paid $250,000 in Eligible Expenses, we will have earned a 25% interest in the Property, with further $250,000, granting us the remaining 25% interest, for a total 50% in the Property. Thereafter, the Agreement grants us an option to enter into a joint venture with WRR for further exploration and development of the Property.

 

The Property consists of 36 claims (Sleeper claims 1–36) comprising 720 acres situated in the Wassuk Range (Mt. Grant Mining District), approximately 40 miles southeast of Yerington, Nevada. The Property is easily accessible by a well-maintained secondary state road to the Lapon Canyon road, which is generally a 15% grade canyon road. A state grid power transmission line passes within two miles of the property. An ample source of water exists (for drilling and other activities) in several locations on the Property.

 

As of September 30, 2016, we have incurred $236,010 in Eligible Expenses on the Exploration Program, of which $153,453 were associated with mineral exploration expenses on the Property. On October 15, 2016, we have incurred required $250,000 in Eligible Expenses, and effectively earned the 25% interest to the Property.

 

Off-Balance Sheet Arrangements

 

None.

 

Use of Estimates:

 

Areas where significant estimation judgments are made and where actual results could differ materially from these estimates are the carrying value of certain assets and liabilities which are not readily apparent from other sources and the classification of net operating loss and tax credit carry forwards.

 

We believe the following is among the most critical accounting policies that impact our financial statements:

 

We evaluate impairment of our long-lived assets by applying the provisions of SFAS No. 144. In applying those provisions, we have not recognized any impairment charge on our long-lived assets during the nine months ended September 30, 2016.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

Item 4. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 

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(b) Changes in Internal Controls over Financial Reporting

 

During the nine month period ended September 30, 2016, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

INHERENT LIMITATIONS OF INTERNAL CONTROLS

 

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

 

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
   
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
   
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

 

Management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

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.

 

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Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

(a)The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference:

  

Exhibit  
Number Description
   
31.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
10.01.1 Definitive Agreement, dated December 17, 2015 (1)
10.01-2 Exploration and Option Agreement, dated September 15, 2015 (1)
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema.
101.CAL XBRL Taxonomy Extension Calculation Linkbase.
101.DEF XBRL Taxonomy Extension Definition Linkbase.
101.LAB XBRL Taxonomy Extension Label Linkbase.
101.PRE XBRL Taxonomy Extension Presentation Linkbase.

 

  (1) Incorporated by reference herein from the Form 8-K filed by the Company on December 22, 2016.

 * Filed herewith.

 

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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.

 

  NEVADA CANYON GOLD CORP.
   
November 14, 2016 /s/ Jeffrey A. Cocks
  Jeffrey A. Cocks
  Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

 

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