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EX-32.2 - Gold Torrent, Inc.ex32-2.htm
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EX-31.2 - Gold Torrent, Inc.ex31-2.htm
EX-31.1 - Gold Torrent, Inc.ex31-1.htm

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended March 31, 2017

 

or

 

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

 

For the transition period from ______________________ to ______________________

 

Commission file number: 000-53872

 

GOLD TORRENT, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   06-1791524
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

960 Broadway Avenue

Suite 530

Boise, Idaho 83706

(Address of principal executive offices, including zip code)

 

(208) 343-1413

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Exchange Act: None

 

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, Par Value $0.001

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [  ] No [X]

 

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 if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

 

Indicate by check mark whether the Company is a larger accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

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. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of June 23, 2017, the registrant’s outstanding common stock consisted of 18,208,602 shares.

 

 

 

   
   

 

Table of Contents

 

  Page
PART I  
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 6
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Mine Safety Disclosures 7
     
PART II  
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data 10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 12
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 16
Item 9A. Controls and Procedures 16
Item 9B. Other Information  
     
PART III  
Item 10. Directors, Executive Officers and Corporate Governance 17
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 22
Item 13. Certain Relationships and Related Transactions, and Director Independence 23
Item 14. Principal Accountant Fees and Services 23
     
PART IV  
Item 15. Exhibits, Financial Statement Schedules 24

 

2
 

 

PART 1

 

Item 1. Business

 

Forward Looking Statements

 

This annual report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

As used in this annual report, the terms “we”, “us” and “our” mean Gold Torrent Inc., unless otherwise indicated.

 

Business Overview

 

Gold Torrent, Inc. (the “Company”) was incorporated in Nevada as Celldonate Inc. on August 15, 2006. Historically we were in the business of developing mobile monetization solutions and applications. On September 10, 2013, certain shareholders, including the Company’s current Chief Executive Officer and its President, acquired approximately 53% of the Company’s issued and outstanding common stock resulting in a change of control. In connection with the transaction, Daniel Kunz was appointed Executive Chairman and Ryan Hart was appointed Chief Executive Officer and President. Thereafter the Company began to focus on acquiring ownership in late-stage exploration to development stage gold mining projects and/or royalty or streaming interests in low capital intensity, late-stage mining projects in North America. On January 16, 2014, the Company changed its name to “Gold Torrent, Inc.” in order to better reflect the direction and business of the Company. On that date, the Company also amended its Articles of Incorporation to (i) effectuate a reverse split of the Company’s common stock on a 1 for 5 basis; and (ii) increase the number of the Company’s authorized capital stock to 220,000,000 of which 200,000,000 were classified as common stock and 20,000,000 were classified as “blank check” preferred stock. On November 19, 2014, the Company entered into a Spin-off Agreement (the “Agreement”) with a company controlled by a former shareholder to sell all intellectual property and assets associated with the previous business of the Company, pursuant to which the Company was released from certain liabilities amounting to $420,653. Daniel Kunz was subsequently named Chief Executive Officer and Chairman and Mr. Hart was named President.

 

Going forward, the Company plans to focus on acquiring ownership in late-stage exploration to development-stage gold mining projects and/or royalty or streaming interests in low capital intensity, late-stage mining projects in North America but may pursue other profitable business opportunities that are available to us. Our main focus will be on identifying solid resources, and then utilize funding to bring a distressed asset into production, while either securing equity ownership or rights of title in the form of royalties. We are targeting pre-production resource projects that are well understood and show strong financial projections and low capital intensity, where we can apply capital to take the projects into production within 12-36 months.

 

On November 5, 2014, the Company signed an Exploration and Option to Enter Joint Venture Agreement with Miranda U.S.A., Inc. (“Miranda”) for the Willow Creek project in Alaska (the “Exploration and Option Agreement”). The Exploration and Option Agreement provides the Company with the right to earn up to 70% interest in a joint venture with Miranda Gold Corp. by making certain expenditures over the next three years totaling US$10 million. The initial principal terms of the Exploration and Option Agreement provided that the Company could earn an initial 20% interest in the Willow Creek gold project by incurring an initial work commitment of $1,070,000 before November 5, 2015 in costs related to exploration and development of the project. On September 2, 2015 Miranda granted the Company a six-month extension to the dates related to the earn-in. Therefore the Company would earn an initial 20% interest in the Willow Creek gold project by incurring an initial work commitment of $1,070,000 before May 5, 2016 in costs related to exploration and development of the project. While the Company shall be the manager of the initial joint venture, the management committee during the initial earn–in period shall be comprised of one nominee from the Company and one nominee from Miranda.

 

Upon completion of the initial work commitment, the Company can then either terminate the agreement or exercise an option to enter into a limited liability company (“JV”) with Miranda under the following terms:

 

  Miranda will assign the underlying twenty-year lease that includes 8,700 acres of patented mining claims and State Claims on the Lucky Shot project to the JV and Miranda will retain a 30% participating interest in the JV;
     
  The Company will solely fund the next US$8.93 million of expenditures on the JV to earn a 70% interest in the JV while Miranda will hold the remaining 30%; and
     
  The Company shall be entitled to 90% of the cash flow from production at the Lucky Shot project until it recovers its US$10 million initial capital investment, and 80% of the cash flow from production thereafter until it recovers any of its initial investment that exceeds $10 million, and thereafter shall be entitled to 70% of project cash flows. Miranda shall be entitled to 10%, 20% and 30%, respectively, of the Lucky Shot cash flow.

 

3
 

 

The Company plans to complete initial engineering, resource, permitting, and economic studies during the initial earn-in period with a goal to bring the Lucky Shot project, beginning initially in the Coleman area gold resource area, into production as soon as possible. Expansion and exploration drilling is planned during construction and during commercial production and is expected to expand the initial known mineralization well beyond the current levels.

 

On January 15, 2015, and January 6, 2016 the Company paid $150,000 for a Lease Agreement between Miranda USA Inc. and a private company, and the amount was included in prepaid expenses and expensed over 12 months. In addition, the Company is committed to paying $150,000 each year on January 15. The purpose of this lease is to afford Miranda USA Inc. the opportunity to enter onto and produce minerals from certain patented and State of Alaska mining claims located in the State of Alaska. This lease is to be transferred by Miranda to the joint venture upon the Company earning its initial 20% interest.

 

On May 25, 2016, the Company received formal notice from Miranda that the Company has acquired a permanent 20% interest in the Lucky Shot project by virtue of meeting the initial earning required expenditures.

 

The Company engaged third party consultants to complete a Preliminary Feasibility Study on its Lucky Shot Project. The Preliminary Feasibility Study for the Lucky Shot Project was completed on June 30, 2016. The study concludes, “The Project is projected to have robust economics at the base case gold and silver prices of $1,175/oz. and $15.00/oz. respectively. The Project would be economically viable based on the parameters considered in this study. The base case scenario produces approximately 79,100 salable ounces of gold and 7,700 salable ounces of silver over a 4.5-year period. The Project is most sensitive to the gold price and to operating costs, but not as sensitive to capital costs. The base case economic analysis of the Project shows an After-Tax NPV-10 of $5.28 million using a 200-tonne/day crushing/grinding/gravity separation plant. The total required initial and working capital is $16.2 million and reaches pay-back in 1.9 years at an after tax IRR of 21.8%.”

 

On July 8, 2016, the Company purchased for $100,507 a 30-acre parcel of private, undeveloped land in Alaska near the Lucky Shot project for the siting of a gold recovery plant.

 

During August 2017 the Company conducted assessment work on the project’s State of Alaska claim blocks. One 640-foot surface core drill hole was completed in an area underlain by the eastern extension of the Murphy Vein block. This drill hole was designed to test the concept that the zone encountered in the 2005 – 2009 prior owner drilling program extends across the valley floor at a depth of about 350 feet. The success of the drill hole provides a much larger resource target area for future exploration drilling. Following are interval assays:

 

                        Gold Grade  
From     To     Feet     Meters     (opt)     (g/t)  
  124       125       1       0.3       0.017       0.53  
  339       347       8       2.6       0.019       0.58  
  352       359       7       2.3       0.008       0.24  

 

During August and September a third party consulting and engineering firm completed geotechnical and environmental baseline assessment work on the gold plant mill site including:

 

  drilled four water monitoring wells
     
  collected baseline water quality samples form the four wells
     
  conducted chemical analysis of the water samples collected
     
  excavated four pits to assess mill foundation load bearing strengths
     
  completed laboratory analysis of the ground materials and
     
  provided survey locations.

 

4
 

 

Detailed design and engineering work for the gold recovery plant was continued through the reporting period. The gravity only gold recovery plant design and final engineering is near complete and ready for construction drawings and plant to be completed. Logistics analyses have been completed for shipment of required plant equipment, materials and supplies from various vendors to the project site. The mine engineering work continued for the period on portal and surface logistics and requirements.

 

On Feb 15, 2017 the Company entered into a convertible preferred note and investment agreement (“Agreement”) with CRH Mezzanine Pte. Ltd., a Singapore private limited company and CRH Funding II Pte. Ltd., a Singapore private limited company (collectively, “CRH”) for a $2,000,000 convertible preferred note and a $11,250,000 gold and silver prepayment arrangement for the Company’s Lucky Shot Gold Project (the “Streaming Arrangement”).

 

On February 14, 2017 the Company received $1,900,000 in proceeds from the note, net of CRH’s legal expenses, to be used as part of the Company’s initial investment in the Project.

 

Concurrent with the closing and funding of the convertible preferred note, the Company and Miranda U.S.A., Inc., a wholly-owned subsidiary of Miranda Gold Corp of Canada, executed a joint venture operating agreement and formed Alaska Gold Torrent LLC, an Alaska limited liability company under which the Company now owns a seventy percent (70%) undivided interest in the Project.

 

Under the terms of the Agreement, the Company borrowed $2,000,000 from the Preferred Note Investor evidenced by convertible preferred notes which will convert into 15% of the shares of common stock of the Company on a post-money basis on the earlier of: (i) a Canadian Going Public Transaction or (ii) funding of the Gold and Silver Prepayment Agreement and following an equity raise by the Company of $5,000,000 or more of which $2,000,000 will be the conversion of the preferred notes. The obligations under the preferred notes are secured by a first priority security interest in all of the assets of the Company pursuant to the terms of a security and pledge agreement.

 

The Company also entered into the Streaming Arrangement among the Stream Investor, the Company, Miranda and Alaska Gold Torrent LLC, under which the Stream Investor will invest up to US$11,250,000, which will be credited to the Company’s investment in Alaska Gold Torrent LLC, as follows:

 

  (i) US$6,500,000 upon satisfaction of certain Tranche 1 conditions; and,
     
  (ii) US$4,750,000 upon satisfaction of certain Tranche 2 conditions including receipt of all necessary permits.

 

The obligations of Alaska Gold Torrent LLC under the Streaming Agreement are secured by a deed of trust, and guaranteed by the Company. In consideration of the $11,250,000 investment by the Stream Investor, Alaska Gold Torrent LLC’s Project will deliver 18% of its annual production of refined gold and silver to the Stream Investor until it has received 20,000 Ounces of gold equivalent; 10% of the annual production until an additional 5,000 Ounces have been delivered; and 5% of the annual production thereafter coming from the patented mining claims of Alaska Gold Torrent LLC and 2.5% of the production coming from the unpatented mining claims. The delivery of Ounces and the repayments under the Gold and Silver Prepayment Agreement shall be borne entirely from the Company’s interest from its Alaska Gold Torrent LLC allocations and cash distributions. Miranda shall be entitled to receive its allocations and the resulting cash distributions using calculations that determine the after-tax cash flow distributions that would have occurred on an “all equity” basis showing cash distributions and allocations assuming the financing had not occurred. The Company is entitled to 90% of the Alaska Gold Torrent LLC cash flow until $10,000,000 is returned, 80% until the remainder of its investment in Alaska Gold Torrent LLC in excess of $10,000,000 is returned, and 70% thereafter.

 

Alaska Gold Torrent LLC is subject to certain events of default under the Gold and Silver Prepayment Agreement including if, from the date of the Tranche 1 drawdown, Alaska Gold Torrent LLC fails to produce at least 5,000 Ounces and deliver to the Stream Investor at least 1,000 Ounces by the 18th month; produce at least 10,000 and deliver to the Stream Investor at least 2,000 Ounces by the 24th month; produce 20,000 and deliver to the Stream Investor at least 4,000 Ounces by the 36th month; deliver to the Stream Investor at least 10,000 Ounces by the 48th month; deliver to the Stream Investor at least 19,400 Ounces by the 60th month; and deliver to the Stream Investor at least 23,900 Ounces by the 72nd month.

 

In consideration for the commitments under the Agreement, the Company issued the Preferred Note Investor common stock purchase warrants to purchase two million shares of common stock of the Company at an exercise price of US$0.50 per share for a period of three years from the date of issuance. In conjunction with the transaction, the Company and the Preferred Note Investor also entered into an Investor Rights Agreement, and an Indemnity Agreement. The convertible preferred note and warrants were issued in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D as promulgated by the SEC under the Securities Act.

 

As part of the Agreement, CRH nominated Mr. Pat Okita, PhD to join the Gold Torrent board of directors and the board has unanimously approved his appointment. Mr Okita joined the board effective Feb 15, 2017

 

Planning continues for project permitting, staffing, training, and project initiation.

 

5
 

 

Since our inception, we have incurred operational losses. We have also accumulated net losses since our inception and incurred a net loss for the most recent audited and interim periods. To finance our operations, we have received advances from related parties, loans and completed several rounds of financing, raising $5,090,350 through private placements of our common stock and funding of the convertible preferred note with CRH.

 

Employees

 

We have four executives, of whom three are full time. Our subsidiary Alaska Gold Torrent LLC is adding staff and hiring contract services for the project engineering and construction work.

 

Competition

 

We compete with other exploration companies for the acquisition of a limited number of exploration rights, and many of the other exploration companies possess greater financial and technical resources than we do. The mineral exploration industry is highly fragmented, and we are a very small participant in this sector. Many of our competitors explore for a variety of minerals and control many different properties around the world. Many of them have been in business longer than we have and have established more strategic partnerships and relationships. We also compete with other exploration companies for the acquisition and retention of skilled technical personnel.

 

Our competitive position depends upon our ability to acquire and explore new and existing gold properties. However, there is significant competition for properties suitable for gold exploration. Failure to achieve and maintain a competitive position could adversely impact our ability to obtain the financing necessary for us to acquire gold properties. As a result, we may be unable to continue to acquire interests in attractive properties on terms that we consider acceptable. We will be subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives, and certain equipment such as drill rigs, bulldozers and excavators that we will need to conduct exploration. If we are unsuccessful in securing the products, equipment and services we need we may have to suspend our exploration plans until we are able to secure them.

 

Market for Gold

 

In the event that gold is produced from our property, we believe that wholesale purchasers for the gold would be readily available. Readily available wholesale purchasers of gold and other precious metals exist in the United States and throughout the world. Among the largest are Handy & Harman, Engelhard Industries and Asahi Refining. Historically, these markets are liquid and volatile. Wholesale purchase prices for precious metals can be affected by a number of factors, all of which are beyond our control, including but not limited to:

 

  fluctuation in the supply of, demand and market price for gold;
     
  mining activities of our competitors;
     
  sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions;
     
  interest rates;
     
  currency exchange rates;
     
  inflation or deflation;
     
  fluctuation in the value of the United States dollar and other currencies; and
     
  political and economic conditions of major gold or other mineral-producing countries.

 

Item 1A. Risk Factors

 

Not required for a smaller reporting company.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

Our executive office is located at 960 Broadway Avenue, Suite 530, Boise, Idaho 83706.

 

6
 

 

This office is currently leased to us since July 1, 2017, and we recognize an expenses of $3,030 rent per month for it. We believe that this office is suitable for our current operations and we do not anticipate requiring any additional property for the company in the foreseeable future.

 

Item 3. Legal Proceedings

 

We are not aware of any legal proceedings to which we are a party or of which our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Our common stock is quoted on the OTCQB under the trading symbol “GTOR”. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company's operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

 

The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

 

Quarter Ended  High ($)  Low ($)
 March 31, 2017    0.60    0.50 
 December 31, 2016    0.68    0.65 
 September 30, 2016    0.50    0.50 
 June 30, 2016    0.50    0.35 
 March 31, 2016    0.25    0.25 
 December 31, 2015    0.40    0.40 
 September 30, 2015    0.27    0.27 
 June 30, 2015    0.15    0.15 
 March 31, 2015    0.70    0.14 
 December 31, 2014    0.70    0.70 
 September 30, 2014    3.00    2.00 
 June 30, 2014    3.00    3.00 

 

Holders

 

As of June 23, 2017, there were approximately 61 holders of record of our common stock. We do not believe that a significant number of beneficial owners hold their shares of our common stock in street name.

 

Dividends

 

We have not paid cash dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock for the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Our future dividend policy will be subject to the discretion of our Board of Directors and will depend upon our future earnings, if any, our financial condition, our capital requirements, general business conditions and other factors.

 

7
 

 

Equity Compensation Plans

 

Equity Compensation Plan Information

 

Plan category  Number of securities to
be issued upon exercise of
outstanding options,
warrants and rights
  Weighted-average
exercise price of
outstanding options,
warrants and rights
  Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected in
column (a))
   (a)  (b)  (c)
Equity compensation plans approved by security holders   175,000   $1.27    19,825,000 
Equity compensation plans not approved by security holders               
Total   175,000   $1.27    19,825,000 

 

The company has granted stock options in conjunction with an Equity Incentive Plan (the “Plan”) for employees, directors and consultants, whereby a maximum aggregate number of common shares that may be issued under the Plan are 20,000,000 common shares. The term of the options is determined by the Board of Directors and cannot exceed 10 years. The exercise price of the stock options is determined by Board of Directors, but shall not be less than the fair market value of the common stock on the date of grant. Stock options granted under the Plan vest over varying periods at the discretion of the Board of Directors. During the fiscal year ended March 31, 2017, the Company granted no options, and plans to terminate the stock option plan and replace it with a new one upon closing of expected financing.

 

During the fiscal year ended March 31, 2015, the Company granted 175,000 options to officers and directors of the Company with the following vesting terms: 1/3 on date of grant, 1/3 six months from date of grant, and 1/3 one year from date of grant.

 

The following table summarizes information about the Company’s share options in accordance with its Plan:

 

   

 

Number

   Weighted-average
exercise price
 
Balance, March 31, 2015    175,000   $1.27 
Granted           
Balance, March 31, 2016     175,000   $1.27 
Granted    -   $- 
Balance, March 31, 2017    175,000   $1.27 

 

The Company’s stock options are outstanding and exercisable as follows:

 

       March 31, 2017 

 

Expiry date

 

 

Exercise price

   Options
outstanding
   Options
exercisable
 
July 30, 2019  $1.25    150,000    100,000 
July 30, 2019  $1.38    25,000    16,667 
         175,000    116,667 

 

The weighted average remaining contractual life of stock options outstanding at March 31, 2017 is 2.33 (March 31, 2016 – 3.33) years.

 

8
 

 

Subsequent to year-end, in April 2017 the board approved a new “2016 Stock Option and Bonus Plan” granting up to 3,000,000 Options to the directors, officers, employees, subsidiary employees and advisors. A number of key subsidiary employees have not been hired yet and are not expected to be hired until later in 2017, the total amount of Options to be issued at this time is 2,175,000.

 

The fair value of all stock options granted are estimated using the Black-Scholes option pricing model with the following weighted-average assumptions and resulting in the following weighted-average fair values:

 

   March 31, 2017 
Risk-free interest rate   1.77%
Expected dividend yield   0%
Expected share price volatility   178%
Expected option life in years   3 
Fair value  $1.20 

 

Companies are required to utilize an estimated forfeiture rate when calculating the expense for the reporting period. Based on the best estimate, management applied the estimated forfeiture rate of Nil% in determining the expense recorded in the accompanying statement of operations. Expected share price volatility is determined with reference to the Company’s historical daily share price volatility.

 

Recent Sales of Unregistered Securities

 

During the year ended March 31, 2017, the Company entered into subscription agreements for the issuance of 2,040,000 shares of common stock at a purchase price of $0.25 per share for a total amount of $510,000 in cash.

 

During the period ended March 31, 2017, the Company entered into subscription agreements for the issuance of 1,890,000 shares of common stock at a purchase price of $0.50 per share for a total amount of $945,000 in cash

 

On April 7, 2017, the Company authorized the issuance of Four Million (4,000,000) shares of its common stock, par value $0.001 per share (the “Common Stock”) to certain members of the Company’s management and technical team for their outstanding service to the Company (the “Share Awards”).

 

Also on April 7, 2017, the Company authorized options (the “Options”) to purchase Three Million (3,000,000) shares of Common Stock (the “Option Shares”) to officers, directors, key employees and managers in order to compensate, retain and incentivize such personnel. The Options are exercisable for five years and vest equally over three years with one-third of the number of Option Shares vesting immediately.

 

Subsequent to year-end, in April 2017, the Company issued 2,100,000 bonus shares of common stock as compensation to its current management and technical team for $0.50 per share strike price and 1,350,000 bonus shares of common stock as compensation to its current CEO and Chairman for $0.55 per share strike price as required by the 2016 Stock Option and Bonus Plan as set out in the table in note 5.

 

9
 

 

The maximum aggregate number of common shares that may be issued under this Plan are 4,000,000 restricted bonus shares. The Shares have not been registered under the Securities Act.

 

The Bonus Shares shall be restricted from sale, transfer or hypothecation, for the longer of: i) a one year period from the grant date; and, ii) the date when Lucky Shot Project is in receipt of all required permits authorizations, licenses, certificates, and other necessary approvals required for and achieves commercial production;

 

The board also approved in the new “2016 Stock Option and Bonus Plan” which authorizes the granting up to 3,000,000 Options to directors, officers, employees, subsidiary employees and advisors.

 

The Options shall vest with 1/3 of the award amount exercisable immediately upon issuance, 1/3 of the award exercisable on the date that is one year from the grant date, and 1/3 of the award exercisable on the date that is two years from the grant date. The Options shall expire (5) years from the grant date.

 

All of the securities set forth above were issued by the Company pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the provisions of Rule 504 of Regulation D promulgated under the Securities Act. All such shares issued contained a restrictive legend and the holders confirmed that they were acquiring the shares for investment and without intent to distribute the shares. All of the purchasers were friends or business associates of the Company’s management and all were experienced in making speculative investments, understood the risks associated with investments, and could afford a loss of the entire investment. The Company did not utilize an underwriter or a placement agent for any of these offerings of its securities.

 

In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

 

Item 6. Selected Financial Data

 

Not required for a smaller reporting company.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

Results of Operations

 

Revenues

 

We have a limited operational history. From our inception on August 15, 2006 to March 31, 2017, we did not generate any revenues. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

On November 19, 2014, the Company entered into a Spin-off Agreement (the “Agreement”) with a company controlled by a former shareholder to sell all intellectual property and assets associated with the previous business of the Company. In exchange for all assets and property related to the previous business, the Company was released from certain liabilities amounted to $420,653 previously recorded in accounts payable owing to the former shareholder or companies controlled by them.

 

The disposal of the net liabilities of the operations resulted in a gain of $418,593. During the current year, we retained new legal counsel and terminated the services of our previous legal counsel. The termination resulted in the Company receiving a settlement of all past and current debt invoices, a mutual release from certain liabilities and obligations, and a $66,000 gain on the settlement of debt due to a negotiated discount.

 

Expenses

 

During the fiscal year ended March 31, 2017, we incurred total expenses of $2,012,671 including $156,382 in accounting and legal fees, $485,000 in executive compensation, $60,907 in licenses and fees, $1,094,138 in exploration and evaluation fees, $9,393 in office expenses, $1,333 in bank charges, 166,497 in interest and finance fees, $38,784 in travel and entertainment, and $2,517 in insurance.

 

For the fiscal year ended March 31, 2016, we incurred total expenses of $1,304,542, including $83,305 in accounting and legal fees, $363,750 in executive compensation $19,613 in licenses and fees, $762,065 in exploration and evaluation fees, $14,296 in bank charges, $28,696 in travel and entertainment, $20,223 in office expenses, $3,744 in advertising and promotion, and $8,850 in share-based payments.

 

10
 

 

The variation in expenses is mainly due to the legal fees and the exploration and evaluation costs incurred for engineering and consultations related to the Lucky Shot property, executive compensation and licenses and fees.

 

Net Loss

 

For the fiscal year ended March 31, 2017, we incurred a net loss of $1,946,671 and a net loss per share of $0.17. For the fiscal year ended March 31, 2016, we incurred a net loss of $1,304,542 and a net loss per share of $0.15.

 

Liquidity and Capital Resources

 

As of March 31, 2017, we had $1,584,684 in cash, and paid $153,487 in prepaids and deposits, $2,831,487 in total liabilities a working capital surplus of $906,324, and a secured convertible preferred note for $2,000,000. We also had invested $100,506 in mill land and funded the JV with 304,900 in capital. As of March 31, 2016, we had $265,315 in cash, and paid $138,248 in prepaids and deposits, $600,162 in total liabilities and a working capital deficit of $196,599. We are dependent on funds raised through equity financing and advances from related parties and loans payable. Our cumulative net loss of $3,961,947 was funded by equity financing and the convertible note. Since our inception on August 15, 2006, we have raised gross proceeds of $3,090,350 in cash from the sale of our securities. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

During the fiscal year ended March 31, 2017, we spent $1,880,352 on operating activities. During the fiscal year ended March 31, 2016, we spent $$953,797 on operating activities. Our increase in cash spending on operating activities during the fiscal year ended March 31, 2017 was primarily due to the exploration and evaluation costs incurred for engineering and consultations related to the Lucky Shot property start up, executive compensation and licenses and fees.

 

During the fiscal year ended March 31, 2017, we invested $100,506 in mill land and funded the JV with $304,900 in capital. In 2016 we did not engage in any investing activities.

 

During the fiscal year ended March 31, 2017, we made payments of approximately $93,793 on the outstanding stockholder’s loan balances and we received $1,455,000 in cash from financing activities in net proceeds from the issuance of our common stock and $2,000,000 in a secured convertible loan, for a total cash provided of $2,965,689 compared to cash receipts of $201,825 on the outstanding stockholder’s loan balances and we received $1,340,900 in cash from financing activities in net proceeds from the issuance of our common stock for a total cash provided of $1,139,075 during the fiscal year ended March 31, 2016.

 

Our increase in cash for the fiscal year ended March 31, 2017 of $1,319,369 was mainly due to increase in cash from financing activities.

 

During the fiscal year ended March 31, 2017, our monthly cash requirements to fund our operating activities, was approximately $156,696 compared to approximately $79,483 during the fiscal year ended March 31, 2016. In the absence of the continued sale of our common stock or advances from related parties, our cash of $1,584,684 as of March 31, 2017 is sufficient to cover our current monthly burn rate for three months and to pay our current liabilities balance of $831,847.

 

Future Financings

 

The Company also entered into the Streaming Arrangement among CRH, the Company, Miranda and Alaska Gold Torrent LLC, under which the Stream Investor will invest up to US$11,250,000, which will be credited to the Company’s investment in Alaska Gold Torrent LLC, as follows:

 

  (i) US$6,500,000 upon satisfaction of certain Tranche 1 conditions; and,
     
  (ii) US$4,750,000 upon satisfaction of certain Tranche 2 conditions including receipt of all necessary permits.

 

Alaska Gold Torrent LLC is subject to certain events of default under the Gold and Silver Prepayment Agreement including if, from the date of the Tranche 1 drawdown, Alaska Gold Torrent LLC fails to produce at least 5,000 and deliver to the Stream Investor at least 1,000 Ounces by the 18th month; produce at least 10,000 and deliver to the Stream Investor at least 2,000 Ounces by the 24th month; produce 20,000 and deliver to the Stream Investor at least 4,000 Ounces by the 36th month; deliver to the Stream Investor at least 10,000 Ounces by the 48th month; deliver to the Stream Investor at least 19,400 Ounces by the 60th month; and deliver to the Stream Investor at least 23,900 Ounces by the 72nd month.

 

11
 

 

The development plan is to initiate gold production based on a preliminary feasibility study and not based on a full feasibility study of the mineral reserves demonstrating that level of economic and technical viability. Readers are cautioned that there is increased uncertainty and higher risk of economic and technical failure associated with such production decisions.

 

We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our securities, loans and advances from related parties to fund our operations. We anticipate that we will incur substantial losses for the foreseeable future, and we are dependent upon outside financing to carry out our operations. Our audited financial statements for the year ended March 31, 2017 have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.

 

Off-Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements.

 

Critical Accounting Policies

 

Our audited financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our audited financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management.

 

Foreign Currency Translation

 

Our audited financial statements are presented in United States dollars. Transactions in currencies other than the U.S. dollar are translated into U.S. dollars at the exchange rate in effect at the balance sheet date for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Expenses are translated at the average rates for the period, excluding amortization, which is translated on the same basis as the related assets. Resulting translation gains or losses are reflected in net loss.

 

Share-based payments

 

The Company records all share-based payments at fair value. Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized through profit or loss over the vesting period, described as the period during which all the vesting conditions are to be satisfied.

 

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model.

 

At each balance sheet date, the amount recognized as an expense is adjusted to reflect the actual number of stock options expected to vest. On the exercise of stock options, common stock is recorded for the consideration received and for the fair value amounts previously recorded to contributed surplus. The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based payments.

 

Recent accounting guidance adopted

 

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

 

Inflation

 

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

Not required for a smaller reporting company.

 

  12 
 

 

Item 8. Financial Statements and Supplementary Data

 

GOLD TORRENT, INC.

March 31, 2017 and 2016

Consolidated Financial Statements

(Expressed in US Dollars)

 

Financial Statement Index

 

Report of Independent Registered Public Accounting Firm   F–1
     
Consolidated Balance Sheets   F–2
     
Consolidated Statements of Operations   F–3
     
Consolidated Statements of Cash Flows   F–4
     
Consolidated Statements of Stockholders’ Deficiency   F–5
     
Notes to Consolidated Financial Statements   F–6

 

  13 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

Gold Torrent, Inc.

 

We have audited the accompanying consolidated balance sheets of Gold Torrent, Inc. as at March 31, 2017 and 2016, and the related consolidated statements of operations, cash flows and stockholders’ deficiency for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gold Torrent, Inc. as at March 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements referred to above have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred losses from operations since inception, has not attained profitable operations and is dependent upon obtaining adequate financing to fulfill its operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Vancouver, Canada  
   
June 22, 2017 Chartered Professional Accountants

 

  F-1 
 

 

GOLD TORRENT, INC.

Consolidated Balance Sheets

(Expressed in US dollars)

 

   March 31, 2017   March 31, 2016 
Assets          
Current Assets          
Cash  $1,584,684   $265,315 
Prepaids and deposits   153,487    138,248 
    1,738,171    403,563 
Long Term Assets          
Mineral property interest (Note 10)   405,406    - 
           
Total Assets  $2,143,577   $403,563 
           
Liabilities          
           
Current Liabilities          
Accounts payable (Note 6)  $356,274   $226,619 
Accrued liabilities (Note 8)   475,573    279,750 
Stockholders’ loans (Note 7)   -    93,793 
    831,847    600,162 
Long Term Liabilities          
Convertible preferred note (Note 11)   2,000,000    - 
           
Total Liabilities   2,831,847    600,162 
Stockholders’ Deficiency          
Common Stock (Note 4)          
Authorized:          
200,000,000 common shares, $0.001 par value          
20,000,000 preferred shares, $0.001 par value          
Issued and outstanding:          
14,758,600 common shares, $0.001 par value   33,087    29,157 
(2016 - 10,828,600 common shares)          
Additional Paid-in Capital   3,057,263    1,606,193 
Contributed Surplus   208,808    208,808 
Deficit   (3,987,428)   (2,040,757)
           
Total Stockholders’ Deficiency   (688,270)   (196,599)
           
Total Liabilities and Stockholders’ Deficiency  $2,143,577   $403,563 

 

Nature of operations and going concern (Note 1)

 

See accompanying notes to consolidated financial statements.

 

  F-2 
 

 

GOLD TORRENT, INC.

Consolidated Statements of Operations

(Expressed in US dollars)

 

  

For the Year Ended
March 31, 2017

   For the Year Ended
March 31, 2016
 
Expenses          
Accounting and legal  $156,382   $83,305 
Advertising and promotion   -    3,744 
Bank charges, interest and finance fees   165,550    14,296 
Executive compensation (Note 8)   485,000    363,750 
Exploration and evaluation (Note 10)   1,094,138    762,065 
Insurance   2,517    - 
Licenses and fees   60,907    19,613 
Office   9,393    20,223 
Share-based payments   -    8,850 
Travel and entertainment   38,784    28,696 
Loss from Operations   (2,012,671)   (1,304,542)
           
Gain on settlement of debt (Note 6)   66,000    - 
           
Net Loss and Comprehensive Loss for the Year  $(1,946,671)  $(1,304,542)
           
Weighted average number of common shares outstanding   11,196,171    8,595,185 
Basic and diluted loss per share  $(0.17)  $(0.15)

 

See accompanying notes to consolidated financial statements.

 

  F-3 
 

 

GOLD TORRENT, INC.

Consolidated Statements of Cash Flows

(Expressed in US dollars)

 

  

For the Year Ended
March 31, 2017

  

For the Year Ended
March 31, 2016

 
         
Cash Flow from Operating Activities          
Net loss for the year  $(1,946,671)  $(1,304,542)
Items not involving cash:          
Share-based payments   -    8,850 
Accrued interest   25,205    13,446 
Gain on settlement of debt   (66,000)   - 
Changes in non-cash working capital items:          
Prepaids and deposits   (15,239)   (16,998)
Accounts payable and accrued liabilities   122,353    345,447 
           
Cash Used in Operating Activities   (1,880,352)   (953,797)
           
Cash Flow from Investing Activity          
Investment in mineral property interest   (161,486)   - 
Cash Used in Investing Activity   (161,486)     
           
Cash Flow from Financing Activities          
Proceeds from issuance of common stock   1,455,000    1,340,900 
Proceeds from convertible preferred note   2,000,000    - 
Repayment of stockholders’ loans   (93,793)   (201,825)
           
Cash Provided by Financing Activities   3,361,207    1,139,075 
           
Increase in Cash   1,319,369    185,278 
Cash, Beginning of Year   265,315    80,037 
           
Cash, End of Year  $1,584,684   $265,315 
           
Supplemental Information          
Tax paid  $-   $- 
Interest paid  $-   $- 

 

See accompanying notes to consolidated financial statements.

 

  F-4 
 

 

GOLD TORRENT, INC.

Consolidated Statements of Stockholders’ Deficiency

(Expressed in US dollars)

 

   Shares of
Common
Stock Issued
   Common Stock   Additional
Paid-in Capital
   Contributed Surplus   Deficit   Total 
Balance, March 31, 2015   5,465,000   $23,793   $270,657   $199,958   $(736,215)  $(241,807)
Shares issued for cash   5,363,600    5,364    1,335,536    -    -    1,340,900 
Share-based payments   -    -    -    8,850    -    8,850 
Net loss for the year   -    -    -    -    (1,304,542)   (1,304,542)
Balance, March 31, 2016   10,828,600    29,157   $1,606,193    208,808    (2,040,757)   (196,599)
Shares issued for cash   3,930,000    3,930    1,451,070    -    -    1,455,000 
Net loss for the year   -    -    -    -    (1,946,671)   (1,946,671)
Balance, March 31, 2017   14,758,600   $33,087   $3,057,263   $208,808   $(3,987,428)  $(688,270)

 

See accompanying notes to consolidated financial statements.

 

  F-5 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

1.Nature of Operations and Going Concern

 

GOLD TORRENT, INC. (the “Company”) was incorporated as a Nevada company on August 15, 2006. Going forward, the Company plans to focus on acquiring ownership in late-stage exploration to development stage gold mining projects and/or royalty or streaming interests in low capital intensity, late-stage mining projects in North America. During the fiscal year ended March 31, 2015, the Company entered into an Exploration and Option to Enter Joint Venture Agreement with a third party (Note 10).

 

The Company has incurred losses since inception and has an accumulated deficit of $3,987,428 (2016 - $2,040,757) as of March 31, 2017, with limited resources and limited source of operating cash flows. As at March 31, 2017, the Company has a working capital of $906,324 (2016 - $196,599 working capital deficiency).

 

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuance as a going concern is dependent on the success of the efforts of its directors and principal stockholders in providing financial support in the short-term, raising additional capital through equity or debt financing either from its own resources or from third parties, and achieving profitable operations. In the event that such resources are not secured, the assets may not be realized or liabilities discharged at their carrying amounts, and the difference from the carrying amounts reported in these consolidated financial statements could be material.

 

These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of the assets or the amounts and classifications of the liabilities that may result from the inability of the Company to continue as a going concern.

 

2.Significant Accounting Policies

 

  (a)Basis of presentation

 

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s functional and reporting currency is the US dollar. These consolidated financial statements include the accounts of the Company and the accounts of the Company’s 70% owned subsidiary, Alaska Gold Torrent, LLC, incorporated in the State of Alaska. For all periods presented, all significant inter-company accounts and transactions have been eliminated in the consolidated financial statements.

 

  (b)Use of estimates

 

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to accounts payable and accrued liabilities, the fair value of warrants attached to common shares issued, the fair value of shares issued for services, the fair value of stock options granted, and the recoverability of income tax assets. While management believes the estimates used are reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

 

  F-6 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

2.Significant Accounting Policies (Continued)

 

  (c)Basic and diluted earnings (loss) per share

 

Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding. Diluted earnings (loss) per share assumes the exercise of common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

 

  (d)Foreign currency translation

 

Transactions in currencies other than the US dollar are translated into US dollars at the exchange rate in effect at the balance sheet date for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Expenses are translated at the average rates for the period, except amortization, which is translated on the same basis as the related assets. Resulting translation gains or losses are reflected in net loss.

 

  (e)Financial instruments

 

All financial instruments are classified as one of the following: held-to-maturity, loans and receivables, held-for-trading, available-for-sale or other financial liabilities. Financial assets and liabilities held-for-trading are measured at fair value with gains and losses recognized in net income. Financial assets held-to-maturity, loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income and reported in stockholders’ equity.

 

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company prioritizes the inputs into three levels that may be used to measure fair value:

 

  (i) Level 1 – Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
     
  (ii) Level 2 – Applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly, such as quoted prices for similar assets or liabilities in active markets, or indirectly, such as quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions.
     
  (iii) Level 3 – Applies to assets or liabilities for which there are unobservable market data.

 

Transaction costs that are directly attributable to the acquisition or issue of financial instruments that are classified as held-to-maturity, loans and receivables or other financial liabilities are included in the initial carrying value of such instruments and amortized using the effective interest method. Transaction costs classified as held-for-trading are expensed when incurred, while those classified as available-for-sale are included in the initial carrying value.

 

  (f)Income taxes

 

The Company uses the asset and liability approach in its method of accounting for income taxes that requires the recognition of deferred tax liabilities and assets for expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company recognizes the effect of uncertain tax positions where it is more likely than not based on technical merits that the position could be sustained where the tax benefit has a greater than 50% likelihood of being realized upon settlement. A valuation allowance against deferred tax assets is recorded if based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

  F-7 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

2.Significant Accounting Policies (Continued)

 

  (g)Share-based payments

 

The Company records all share-based payments at fair value. Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized through profit or loss over the vesting period, described as the period during which all the vesting conditions are to be satisfied.

 

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model.

 

At each balance sheet date, the amount recognized as an expense is adjusted to reflect the actual number of stock options expected to vest. On the exercise of stock options, common stock is recorded for the consideration received and for the fair value amounts previously recorded to contributed surplus. The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based payments.

 

  (h)Exploration and evaluation

 

The Company is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. An impairment loss is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value.

 

  (i)Recent accounting guidance adopted

 

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

 

3.Financial Instruments

 

The Company has designated its cash as held-for-trading; and accounts payable, accrued liabilities and stockholders’ loans, as other financial liabilities.

 

  (a)Fair value

 

The fair values of the Company’s cash, accounts payable, accrued liabilities and stockholders’ loans approximate their carrying values due to the short-term maturity of these instruments.

 

  (b)Credit risk

 

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company is not exposed to significant credit risk as at March 31, 2017 and 2016.

 

  F-8 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

3.Financial Instruments (Continued)

 

  (c)Translation risk

 

The Company’s functional currency is the US dollar. The Company translates transactions in foreign currencies into US currency using rates on the date of the transactions. Translation risk is considered minimal, as the Company does not incur any significant transactions in currencies other than US dollars.

 

  (d)Interest rate risk

 

The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and liabilities.

 

  (e)Liquidity risk

 

Liquidity risk is the risk that the Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. At March 31, 2017, the Company had accounts payable of $356,274 (2016 - $226,619), which are due within 30 days or less. As at March 31, 2017, accrued liabilities consist of accrued accounting and legal fees of $15,000 (2016 - $15,000), accrued interest of $25,205 (2016 - $Nil), accrued executive compensation of $407,607 (2016 - $264,750), and exploration and development costs of $27,761 (2016 - $Nil).

 

4.Common Stock

 

During the year ended March 31, 2016, the Company entered into subscription agreements for the issuance of 5,363,600 shares of common stock at a purchase price of $0.25 per share for a total amount of $1,340,900 in cash.

 

During the year ended March 31, 2017, the Company entered into subscription agreements for the issuance of 2,040,000 shares of common stock at a purchase price of $0.25 per share for a total amount of $510,000 in cash, and 1,890,000 shares of common stock at a purchase price of $0.50 per share for a total amount of $945,000 in cash.

 

Subsequent to year-end, in April 2017, the Company entered into subscription agreements for the issuance of 2,100,000 bonus shares of common stock as compensation to its current management and technical team for $0.50 per share, and 1,350,000 bonus shares of common stock as compensation to its current CEO and Chairman for $0.55 per share.

 

5.Stock Options

 

The stock options have been granted in conjunction with an Equity Incentive Plan (the “Plan”) for employees, directors and consultants, whereby a maximum aggregate number of common shares that may be issued under the Plan are 20,000,000 common shares. The term of the options is determined by the Board of Directors and cannot exceed 10 years. The exercise price of the stock options is determined by the Board of Directors, but shall not be less than the fair market value of the common stock on the date of grant. Stock options granted under the Plan vest over varying periods at the discretion of the Board of Directors.

 

  F-9 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

5.Stock Options (Continued)

 

The Company’s stock options are outstanding and exercisable as follows:

 

       March 31, 2017 

 

Expiry date

  Exercise price   Options outstanding   Options exercisable 
July 30, 2019  $1.25    150,000    150,000 
July 30, 2019  $1.38    25,000    25,000 
         175,000    175,000 

 

During the fiscal years ended March 31, 2017 and 2016, the Company did not grant any stock options. The weighted average remaining contractual life of stock options outstanding at March 31, 2017 is 2.33 (2016 – 3.33) years.

 

Subsequent to year-end, in April 2017, the Board approved a new “2016 Stock Option and Bonus Plan” granting up to 3,000,000 options to the directors, officers, employees, subsidiary employees and advisors; the total amount of options granted was 2,175,000.

 

6.Accounts Payable

 

Accounts payable as at March 31, 2017 includes the following:

 

- $55,000 due to a company controlled by an officer and stockholder of the Company; and

- $301,274 due to consultants and unrelated parties.

 

During the year ended March 31, 2017, the Company repaid $26,000 to a vendor to settle an amount owing of $92,000, which resulted in a gain on settlement of debt in the amount of $66,000.

 

7.Stockholders’ Loans

 

As at March 31, 2017, current officers and stockholders of the Company had loans outstanding of $Nil (2016 $93,793).

 

8.Related Party Transactions

 

Transactions with related parties for goods and services are based on the exchange amount as agreed to by the related parties.

 

Details of related party transactions are as follows:

 

  (a) Effective October 1, 2014, the Company signed a technical services and administration consulting agreement with a company controlled by a director, pursuant to which the Company agreed to pay a monthly fee of $9,529 including overhead and rent. This amount was changed to $13,529 in January 2016 due to the hiring of an additional employee. Additional changes occurred on July 1, 2016 and October 1, 2016, where the monthly fee was reduced to $12,000 and then $8,000 respectively. During the year ended March 31, 2017, the Company paid or accrued various expenses of $124,589 (2016 - $447,817) relating to this agreement.
     
  (b) During the year ended March 31, 2015, the Company granted 125,000 stock options to directors and officers with a total fair value of $142,502. During the year ended March 31, 2017, a further fair value of $Nil (2016 - $8,850) vested into share-based payments expense.

 

  F-10 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

8.Related Party Transactions (Continued)

 

  (c) During the year ended March 31, 2016, the Company signed employment agreements with three directors and officers. A total of $485,000 (2016 - $363,750) was accrued during the year ended March 31, 2017 as a result of these contracts, and $462,607 (2016 - $264,750) were owing as at March 31, 2017.
     
  (d) During the year ended March 31, 2017, the Company signed a non-exclusive license agreement with a company controlled by a director, pursuant to which the Company accepts the Licensor to construct, build, own, and operate the Licensed Good for use associated with the Lucky Shot gold project near Willow, Alaska. The Licensor and the Licensee agreed on a lump sum of $200,000 for each single plant with a design capacity of 400 tonnes of ore per day.

 

9.Segmented Information

 

The Company operates primarily in one business segment being the identification and development of mining projects with substantially all of its assets and operations located in the United States.

 

10.Exploration and Evaluation

 

On July 28, 2014, the Company entered into a non-binding Letter of Intent (“LOI”) with a third party to negotiate and enter into a Joint Venture Agreement for the development of the gold property known as Lucky Shot, Alaska (formerly known as “Willow Creek”). On November 5, 2014, the Company signed an Exploration and Option to Enter Joint Venture Agreement for the Lucky Shot project in Alaska. The Exploration and Option Agreement provides the Company with the right to earn up to a 70% interest in a joint venture with Miranda USA Inc. (“Miranda”) by making certain expenditures over the next three years totaling $10,000,000. The principal terms of the Exploration and Option Agreement initially provided that the Company could earn an initial 20% interest in the Lucky Shot gold project by incurring an initial work commitment of $1,070,000 before November 5, 2015 in costs related to exploration and development of the project. On September 2, 2015, Miranda granted the Company a six-month extension to the dates related to this earn-in. Therefore, the Company was able to earn an initial 20% interest in the Lucky Shot gold project by incurring an initial work commitment of $1,070,000 before May 5, 2016 in costs related to exploration and development of the project.

 

On January 15, 2015 and January 6, 2016, the Company paid $150,000 for a Lease Agreement between Miranda and a private company, and the amount was included in prepaid expenses and expensed over 12 months. In addition, the Company is committed to paying $150,000 every year on January 15. The purpose of this lease is to afford Miranda the opportunity to enter onto and produce minerals from certain patents and State of Alaska mining claims located in the State of Alaska. This lease is to be transferred by Miranda to the joint venture upon the Company earning its initial 20% interest. The parties have agreed to postpone forming the joint venture company until the project finance discussions have been advanced to a point where the security and other requirements of the project investor can be determined.

 

On May 25, 2016, the Company received formal notice from Miranda that the Company has acquired a permanent 20% interest in the Lucky Shot project by virtue of meeting the initial earning required expenditures.

 

On July 8, 2016, the Company purchased a 30-acre parcel of private, undeveloped land for $100,506 and on March 15, 2017, purchased a building for $304,900 in Alaska near the Lucky Shot project for the siting of a gold recovery plant. As at March 31, 2017, a total of $405,406 (2016 - $Nil) has been capitalized as “mineral property interest” on the consolidated balance sheet.

 

  F-11 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

10.Exploration and Evaluation (Continued)

 

The total of $2,886,925 expended for exploration and development costs consists of cumulative acquisition, exploration, engineering and evaluation costs of $949,932 as of March 31, 2016, and $1,936,993 in additional expenditures during the year ended March 31, 2017, consisting of:

 

Property acquisition  $405,406 
Capital contribution in Alaska Gold Torrent, LLC   300,000 
Mine engineering   197,107 
Mill engineering   400,996 
Laboratory   40,993 
Metallurgy   72,302 
Geology   92,011 
Exploration drilling   62,471 
Permitting   61,347 
Development related travel   89,219 
Development related administration   15,727 
Development related rent   26,206 
Property lease (including prepaid)   173,208 
Total Cost  $1,936,993 

 

11.Convertible Preferred Note

 

On February 15, 2017, the Company entered into a convertible preferred note and investment agreement with two Singapore private limited companies for a $2,000,000 convertible preferred note and a $11,250,000 gold and silver prepayment arrangement for the Company’s Lucky Shot gold project. The Company paid $100,000 in legal expenses and used the proceeds from the note as part of the Company’s initial investment in the project.

 

The convertible preferred note bears interest at 10% per annum, is due on February 13, 2019 and secured by certain assets of the Company. It is also convertible into 15% of the shares of common stock of the Company on a post-money basis on the earlier of: (i) a Canadian Going Public Transaction or (ii) funding of the $11,250,000 prepayment arrangement and following an equity raise by the Company of $5,000,000 or more (of which $2,000,000 will include the conversion of the preferred note).

 

Concurrent with the closing and funding of the convertible preferred note, the Company and Miranda, a wholly-owned subsidiary of Miranda Gold Corp. of Canada, executed a joint venture operating agreement and formed Alaska Gold Torrent, LLC, an Alaska limited liability company under which the Company now owns a seventy percent (70%) undivided interest in the project.

 

  F-12 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

12.Income Taxes

 

Deferred income taxes reflect the tax consequences for future years of differences between the tax basis of assets and liabilities and their financial reporting amounts.

 

The provision for income taxes differs from the result that would be obtained by applying the statutory tax rate of 35% (2016 - 35%) to income before income taxes as follows:

 

  

March 31, 2017

   March 31, 2016 
         
Computed expected income tax benefit  $682,000   $(453,000)
Change in valuation allowance   (682,000)   453,000 
           
Income tax provision  $-   $- 

 

The potential benefit of net operating loss carry-forwards has not been recognized in these financial statements since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The components of deferred income tax assets and the amount of the valuation allowance are as follows:

 

  

March 31, 2017

   March 31, 2016 
         
Net operating losses carried forward  $1,469,000   $787,000 
Valuation allowance   (1,469,000)   (787,000)
           
Net deferred income tax assets  $-   $- 

 

The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the reliability of the deferred income tax assets such that a full valuation allowance has been recorded. These factors include the Company’s current history of net losses and the expected near-term future losses. The operating losses amounting to $4,196,000 will expire between 2027 and 2037 if they are not utilized. The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating loss carry-forwards:

 

Fiscal Year   Amount   Expiry Date 
          
2007   $55,000    2027 
2008    38,000    2028 
2009    52,000    2029 
2010    63,000    2030 
2011    60,000    2031 
2012    63,000    2032 
2013    96,000    2033 
2014    131,000    2034 
2015    395,000    2035 
2016    1,296,000    2036 
2017    1,947,000    2037 
            
    $4,196,000      

 

  F-13 
 

 

GOLD TORRENT, INC.

Notes to Consolidated Financial Statements

Years Ended March 31, 2017 and 2016

(Expressed in US dollars)

 

12.Income Taxes (Continued)

 

For the years ended March 31, 2017 and 2016, the Company did not have any unrecognized tax benefits, and thus no interest and penalties relating to unrecognized tax benefits were recognized. The Company records interest and penalties on unrecognized tax benefits, if any, as a component of income tax expense. In addition, the Company does not expect that the amount of unrecognized tax benefits will change substantially within the next twelve months.

 

The Company’s US federal income tax returns are open to examination by the Internal Revenue Service for the 2011, 2012, 2013, 2014, 2015, 2016, and 2017 taxation years.

 

13.Subsequent Events

 

Subsequent to year-end, in April 2017, the Company entered into subscription agreements for the issuance of 2,100,000 bonus shares of common stock as compensation to its current management and technical team for $0.50 per share, and 1,350,000 bonus shares of common stock as compensation to its current CEO and Chairman for $0.55 per share.

 

In April 2017, the Board also approved a new “2016 Stock Option and Bonus Plan” granting up to 3,000,000 options to the directors, officers, employees, subsidiary employees and advisors; the total amount of options granted was 2,175,000.

 

The Company evaluates events that have occurred after the balance sheet date, but before the financial statements are issued. Based upon the evaluation, other than what is described above, the Company did not identify any recognized or non-recognized subsequent events that would have required further adjustments or disclosures in the financial statements.

 

  F-14 
 

 

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Item 9A. Controls and Procedures

 

Disclosure Controls

 

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) designed to provide reasonable assurance the information required to be reported in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to Securities and Exchange Commission (“SEC”) rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Under the supervision of our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2016 using the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of March 31, 2017, we determined that there were significant deficiencies that constituted material weaknesses, as described below.

 

  1. We have increased the number of independent directors to 50% and we do not have a majority of independent directors. We have drafted a policy on fraud and a code of ethics , which will be adopted upon approval by the board.
     
  2. All cash management is conducted solely by two officers, which may result in the misappropriation of funds. However the officers have adopted a procedure of requiring two signatures and approvals on each check or fund expenditures.
     
  3. The exercising of oversight by independent directors exercising is increasing with the additional director and this will continue to address  the risk of management override and potential fraud.
     
  4. We are in the development stage with limited resources and limited monitoring of internal control and assessment of risk is conducted.

 

Management is continues to evaluate and implement remediation plans for the above control deficiencies.

 

In light of the existence of these control deficiencies, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

 

  14 
 

 

As a result, management has concluded that we did not maintain effective internal control over financial reporting as of March 31, 2017 based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

 

Changes in Internal Control

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

The following table sets forth certain information of our directors and officers as of the date of this report.

 

Name  Age  Position  Director/Officer Since
Daniel Kunz  64  Chief Executive Officer, Chairman  September 30, 2013
Ryan Hart  40  President and director  September 30, 2013
Alexander Kunz  32  Chief Financial Officer and director  October 14, 2013
Roy Eiguren  64  Director  October 14, 2013
Steven McGrath  67  Director  October 14, 2013
Pat Okita  57  Director  February 9, 2017

 

Daniel Kunz – Chief Executive Officer and Chairman (Principal Executive Officer)

 

Mr. Kunz has significant experience in international mining, engineering and construction, including, marketing, business development, management, accounting, finance and operations. Mr. Kunz was senior vice president and Chief Operating Officer of Ivanhoe Mines Ltd. from November 1997 until October 2000, and then was President, Chief Executive Officer and director from November 2000 until March 2003. Mr. Kunz also headed the finance, development, construction and operation of a low cost heap leach, copper cathode mine in Myanmar, developed a small high-grade gold mine in South Korea, led the acquisition of the Savage River iron ore pellet mine and facility in Australia and directed the startup of test production at a metallurgically complex 13 million ounce gold mine in Kazakhstan. From April 2003 to March 2004, Mr. Kunz served as interim President and Director of Jinshan Gold Mines, a subsidiary of Ivanhoe Mines Ltd. In 2003 Jinshan Gold Mines was acquired by China National Gold Corp. Jinshan was engaged in heap leach gold production and through extensive local partnerships and ventures explored for copper, gold and platinum group metals in China. As Co-Founder, President and CEO of MK Gold Company, he directed its initial public offering on the NASDAQ exchange in 1993.

 

Mr. Kunz held executive positions with NYSE listed Morrison Knudsen Corporation (including as Corporate Vice President and Controller) for 17 years. During his tenure at Morrison Knudsen Corporation, Mr. Kunz was involved in international and local mine operations, engineering and finance for numerous contract mining and owned and operated coal, gold, silver, limestone, aggregate, and copper mines. Mr. Kunz holds a Masters of Business Administration and a Bachelor of Science in Engineering. Mr. Kunz was selected to serve on our Board based on his knowledge of and relationships in the mining business.

 

  15 
 

 

Ryan E. Hart – President and director

 

After working several years at Credit Suisse and UBS in the fields of Equity Trading and Portfolio Management, Mr. Hart worked as an alternative investment advisor – with a strong focus on hedge funds and venture capital – to independent asset managers and high net worth individuals. Mr. Hart and his clients have been early investors in numerous public and private businesses, offering start-up and small companies the financial resources and network to execute their business plans and create sustainable shareholder value. Past and current portfolio holdings include investments in the information technology, oil and gas, precious metals mining and energy/resource recovery, tobacco as well as timber sectors. From November 2009 to December 2012, Mr. Hart first served as Chairman and later as Chief Executive Officer of another mining company, Turk Power Corporation. From December 2012 to September 2013, Mr. Hart served as Chief Executive Officer of Zinco de Brazil, a company primarily engaged in the mining business. Mr. Hart holds a Bachelor Degree in Business Administration and is fluent in German and English.

 

Alexander Kunz – Chief Financial Officer and Director

 

Mr. Kunz is a licensed attorney with several years of experience in government regulation and regulatory law at Capital Law Group in Boise, Idaho. Prior to working with Daniel Kunz & Associates, Mr. Kunz served at the United States Treasury Alcohol and Tobacco Tax and Trade Bureau for one year during 2012 in Washington D.C. where he helped author several regulatory laws. He served as associate legal counsel to Kenai Resources Ltd, a gold exploration company with properties in Brazil, Oregon, Idaho and Venezuela where he worked with the Bureau of Land Management on land matters from 2004 to 2005. Mr. Kunz holds a BS in biology/chemistry and a Masters in Management Science as well as a Juris Doctorate from Creighton University. Mr. Kunz has the legal and technical skills and prior experience to assist us in due diligence and investigations for the sourcing and acquisition of mineral resource properties and opportunities.

 

Roy Eiguren – Director

 

Mr. Eiguren is a partner in the lobbying and public policy consulting firm of Sullivan, Reberger and Eiguren and formerly was the President of Eiguren Public Policy LLC, a lobbying and public policy consulting firm which he founded in 2007. He is Of Counsel to the Capitol Law Group in Boise. In addition, Mr. Eiguren is President of Inland Public Properties Development Company of Idaho, which leases real estate facilities. Prior to April 2007, he was a senior partner in the Boise law firm of Givens Pursley LLP. Before entering private practice in 1984, Mr. Eiguren worked as a Special Assistant to the Administrator and CEO of the Bonneville Power Administration, U.S. Department of Energy, and prior to that, served as Chief of the Legislative and Administrative Affairs Division of the Idaho Attorney General's office. He also served two years as Deputy Prosecuting Attorney for Ada County, Idaho. Mr. Eiguren is a member of the American and Federal Bar Association. He is a former Director of Avista Corporation, where he served on the Audit Committee and the Energy, Environmental, and Operations Committees of the Board. Mr. Eiguren is the Chairman of the Board of Advisors of Exergy Development Company. He is a past Chairman of the Boise Metro Chamber of Commerce, and the Chairman of the Idaho State Capitol Commission. Mr. Eiguren is a native of Idaho and graduated in 1974 from the University of Idaho with a Bachelor of Arts Degree in political science and a law degree in 1977. He is a graduate of the Executive Management Program of Dartmouth College's School of Business Administration. Mr. Eiguren is also the President of the Cenarrusa Center for Basque Culture. Mr. Eiguren has experience as a public listed company director and has the skills and experience required to provide independent direction and corporate governance oversight for the company.

 

  16 
 

 

Steven McGrath – Director

 

Mr. McGrath is a senior metallurgist with over 30 years experience as a hydrometallurgist and chemist. From 1997 to 2005 he worked as the chief research Chemist and Mettallurgist for Montec Research, Inc. (Resodyn Corp.) and has served as principal Investigator on projects for the National Science Foundation, Department of Energy,Department of Defense, Environmental Protection Agency and the National Oceanic and Atmospheric administration. From 1996 to 1997 he was a geochemist for Montana Bureau of Mines and Geology, and from 1993 to 1995 he was Research Hydrometallurgist for Metanetix, Inc. From 1990 to 1993 and from 2005 to 2013 he was Chief Chemist to the Montana Bureau of mines and Geology. Mr. McGrath recently retired from the Montana Bureau of Mines and Geology where he was involved in mineral analytical work and metallurgical studies of a significant number of projects in North America. He is a graduate of the University of Montana (B.A., 1974) and the Montana College of Mineral Science and Technology (B.S., 1980; M.S., 1983; and M.S., 1992).Mr. McGrath has the metallurgical experience, skills and background to act as an independent director providing direction regarding the identification and selection of mineral resource projects for the Company.

 

Pat Okita – Director

 

Mr. Okita has served as the Principal and Economic Geologist of Upstream Resources, LLG since its founding in 2000 to the present. The firm commercial, technical, scientific, and educational services and products to support partners and clients involved in natural resource management, investment, development, and assessment. Mr. Okita earned a B.S. from the University of Rochester in 1980, a M.S. from Louisiana State University in 1984, and a PhD from the University of Cincinnati in 1987.

 

Family Relationships

 

There are no family relationships among our directors, executive officers or persons nominated or chosen by us to become directors or executive officers except that Alexander Kunz is the son of Daniel Kunz.

 

Legal Proceedings

 

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past 10 years:

 

  any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
     
  any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
     
  being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
     
  being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;
     
  any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business activity;
     
  and judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; or
     
  any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

Section 16(a) Beneficial Ownership Compliance Reporting

 

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our common stock to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended March 31, 2016 our directors, executive officers and 10% stockholders complied with all applicable filing requirements.

 

  17 
 

 

Code of Ethics

 

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we have not yet finalized the content of such a code.

 

Audit Committee

 

We do not have an audit committee. Our entire Board of Directors carries out the functions of the audit committee.

 

Our Board has determined that we do not have an audit committee financial expert on our Board carrying out the duties of the audit committee. The Board has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having an audit committee financial expert on the Board.

 

Nomination Procedures for Directors

 

We do not have a nominating committee. Our Board of Directors selects individuals to stand for election as members of the Board, and does not have a policy with regards to the consideration of any director candidates recommended by our security holders. Our Board has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when it considers a nominee for a position on our Board. If security holders wish to recommend candidates directly to our Board, they may do so by communicating directly with our President at the address specified on the cover of this annual report. There has not been any change to the procedures that our shareholder may recommend nominees to our Board of Directors.

 

Item 11. Executive Compensation

 

During the year ended March 31, 2017, the Company signed employment agreements with three directors and officers. A total of $575,000 ($363,750 March 31, 2016) was recognized in the period as a result of these contracts. The following table sets forth certain information of our directors and officers as of the date of this report.

 

Name

and

principal

position

  Year   Salary     Bonus     Stock awards    Option awards     Nonequity incentive plan compensation     Nonqualified deferred compensation earnings     All other compensation     Total 
Daniel Kunz  2017  $220,000   $-   $-   $-   $-   $-   $-   $220,000 
Daniel Kunz  2016  $165,000   $-   $-   $-   $-   $-   $-   $165,000 
Daniel Kunz  2015  $-   $-   $-   $25,000   $-   $-   $-   $25,000 
Ryan Hart  2017  $170,000   $-   $-   $-   $-   $-   $-   $127,500 
Ryan Hart  2016  $127,500   $-   $-   $-   $-   $-   $-   $127,500 
Ryan Hart  2015  $   $-   $-   $25,000   $-   $-   $-   $65,000 
Alexander Kunz  2017  $95,000   $-   $-   $-   $-   $-   $-   $95,000 
Alexander Kunz  2016  $71,250   $-   $-   $-   $-   $-   $-   $71,250 
Alexander Kunz  2015  $-   $-   $-   $-   $-   $-   $-   $- 

  

  18 
 

 

Name  Position  Compensation for the year ended March 31, 2017
Daniel Kunz  Chief Executive Officer, Chairman  $220,000 
Ryan Hart  President and director  $170,000 
Alexander Kunz  Chief Financial Officer and director  $95,000 
Roy Eiguren  Director   -   
Steven McGrath  Director   -   
Pat Okita  Director   -   
Total:     $485,000 

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

 

Compensation Committee

 

We currently do not have a compensation committee of the Board of Directors or a committee performing similar functions. It is the view of the Board that it is appropriate for us not to have such a committee because of our size and because the Board as a whole participates in the consideration of executive compensation. None of our executive officers served as a director or member of the compensation committee of any entity that has one or more executive officers serving on our Board.

 

Board Leadership Structure and Role in Risk Oversight

 

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is in the best interests of the Company and its shareholders to combine these roles. Daniel Kunz serves as our Chairman and Chief Executive Officer. We believe it is in the best interest of the Company to have the Chairman and Chief Executive Officer roles combined due to our small size and limited resources.

 

Our Board of Directors is primarily responsible for overseeing our risk management processes. The Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The Board of Directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our company are consistent with the Board’s appetite for risk. While the Board oversees our company, our company’s management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our Board leadership structure supports this approach.

 

  19 
 

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth the ownership, as of June 23, 2017, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of June 23, 2017, there were 18,208,602 shares of our common stock issued and outstanding. All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this annual report.

 

Name and Address of Beneficial Owner (1) 

Common Stock

Beneficially Owned

  

Percentage of

Common Stock (2)

 
Directors and Officers:        
Daniel Kunz
   3,536,184    19.4%
Ryan Hart
   1,014,125    5.6%
Alexander Kunz
   250,000    1.4%
Roy Eiguren   150,000    0.8%
Steven McGrath
   58,000    0.3%

All officers and directors as a group (five persons)

   5,008,309    27.5%
           
5% or more Shareholders          
Fuse Capital, LLC
40 Hemlock Drive,
Roslyn, NY, 11576
   1,334,571    6.2%
Gold Production Development Ass.
24 Elk Run Road,
Boise, ID, 83716
   1,255,600    6.9%
Gold Tree Metals, LLC
2807 S. Military Trail,
West Palm Beach, FL, 33415
   1,346,500    7.4%

 

  (1) Except as otherwise indicated, the address of each beneficial owner is the Company’s address.
     
  (2) Applicable percentage ownership is based on 18,208,602 shares of common stock outstanding as of June 23, 2017, together with securities exercisable or convertible into shares of common stock within 60 days of June 23, 2017, for each stockholder. Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of June 23, 2017, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 

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Change of Control

 

As of the date of this report, we had no pension plans or compensatory plans or other arrangements that provide compensation in the event of a termination of employment or a change in our control.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of those persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two fiscal years.

 

Related Person Transaction Policy

 

Our Board of Directors is responsible to approve all related party transactions. We have not adopted written policies and procedures specifically for related person transactions.

 

Director Independence

 

We currently use NASDAQ’s general definition for determining director independence, which states that “independent director” means a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, that, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director. Two of our current directors, Steven McGrath and Roy Eiguren, meet this definition of independence.

 

Item 14. Principal Accountant Fees and Services

 

Audit and Non-Audit Fees

 

The following table sets forth the fees for professional audit services and the fees billed for other services rendered by our auditors, Morgan & Company LLP Chartered Professional Accountants, in connection with the audit of our financial statements for the years ended March 31, 2016 and 2015, and any other fees billed for services rendered by our auditors during these periods.

 

   Year Ended
March 31, 2017
($)
   Year Ended
March 31, 2016
($)
 
Audit fees   17,217    18,027 
Audit-related fees   -    - 
Tax fees   -    - 
All other fees        - 
Total   17,217    18,027 

 

Since our inception, our Board of Directors, performing the duties of the audit committee, has reviewed all audit and non-audit related fees at least annually. The Board, acting as the audit committee, pre-approved all audit related services for the year ended March 31, 2017.

 

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PART IV

 

Item 15. Exhibits, Financial Statement Schedules

 

  Exhibit Number   Exhibit  Description
       
  3.1   Articles of Incorporation (1)
       
  3.2   Articles of Amendment (2)
       
  3.3   Bylaws (1)
       
  31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002*
       
  31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002*
       
  32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  **
       
  32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  8**
       
  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 Presentation Linkbase*

 

* Filed herewith.

 

** Furnished herewith.

 

(1) Incorporated herein by reference to exhibits to our registration statement on Form S-1 filed with the SEC on May 18, 2009. 

 

(2) Incorporated herein by reference to Exhibit 3.1 to our current report on Form 8-K filed with the SEC on January 23, 2014.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

Date: June 23, 2017 GOLD TORRENT, INC.
        
   By: /s/ Daniel Kunz
      Daniel Kunz
      Chief Executive Officer, Director (principal executive officer)
     
   By: /s/ Alexander Kunz
      Alexander Kunz
      Chief Financial Officer, Director
(principal financial and accounting officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

 

Signature   Capacity   Date
            
/s/ Daniel Kunz   Chief Executive Officer, Director   June 23, 2017
Daniel Kunz   (Principal Executive Officer)     
            
/s/ Alexander Kunz   Chief Financial Officer, Director   June 23, 2017
Alexander Kunz   (Principal Financial and Accounting Officer)     
         
/s/ Roy Eiguren   Director   June 23, 2017
Roy Eiguren        
         
/s/ Pat Okita   Director   June 23, 2017
Pat Okita          
            
/s/ Steven McGrath   Director   June 23, 2017
Steven McGrath         
         
/s/ Ryan Hart   Director   June 23, 2017
Ryan Hart        

 

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