UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] quarterly REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: June 30, 2017

 

or

 

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

 

For the transition period from ______ to ______

 

Commission File No. 333-196075

 

NEVADA CANYON GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada		46-5152859
(State or other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

 

316 California Avenue, Suite 543
Reno, NV		89509
(Address of Principal Executive Offices)		(Zip Code)

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

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

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 14, 2017, the number of shares outstanding of the issuer’s sole class of common stock, par value $0.0001 per share, is 44,050,000.

 

 

 

table of contents

 

	Page
Part I – FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Balance Sheets	3
Statements of Operations	4
Statements of Cash Flow	5
Notes to the Interim Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations	9
Results of Operations	12
Off-Balance Sheet Arrangements	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16
PART II — OTHER INFORMATION	17
Item 1. Legal Proceedings	17
Item 1A. Risk Factors	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Mine Safety Disclosures	17
Item 5. Other Information	17
Item 6. Exhibits	17
SignatureS	18

 

 

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

Nevada Canyon Gold Corp.

Balance Sheets

(Presented in US Dollars)

 

		June 30, 2017				December 31, 2016
		(Unaudited)
ASSETS
Current Assets
Cash		$	4,538			$	51,789
Prepaid expenses			7,003				15,008
			11,541				66,797
Mineral property interests			80,000				65,000
TOTAL ASSETS		$	91,541			$	131,797
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued liabilities			6,042				8,200
Related party advances			93,000				98,000
			99,042				106,200
Stockholders' Equity (Deficit)
Preferred Stock: Authorized 10,000,000 preferred shares, $0.0001 par, none issued and outstanding as of June 30, 2017 and December 31, 2016			-				-
Common Stock: Authorized 100,000,000 common shares, $0.0001 par, 44,050,000 issued and outstanding as of June 30, 2017 and December 31, 2016			4,405				4,405
Additional paid in capital			457,695				457,695
Accumulated deficit			(469,601	)			(436,503	)
			(7,501	)			25,597
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)		$	91,541			$	131,797

 

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

 

 

NEVADA CANYON GOLD CORP.

Statements of Operations

(Presented in US Dollars)

(Unaudited)

 

		For the three months ended June 30,								For the six months ended June 30,
		2017				2016				2017				2016
Revenue		$	15,000			$	-			$	15,000			$	-
Operating expenses
Exploration expenses			9,284				14,171				29,292				39,124
General and administrative expenses			5,885				11,133				10,830				22,597
Professional fees			1,500				23,677				4,000				26,177
Transfer agent and filing fees			1,875				3,326				3,976				5,552
			(18,544	)			(52,307	)			(48,098	)			(93,450	)
Other items
Interest expense			-				(1,260	)			-				(2,493	)
Net and comprehensive loss		$	(3,544	)		$	(53,567	)		$	(33,098	)		$	(95,943	)
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding - basic and diluted			44,050,000				48,582,967				44,050,000				134,045,880

 

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

 

 

NEVADA CANYON GOLD CORP.

Statements of Cash Flow

(Presented in US Dollars)

(Unaudited)

 

		For the six months ended June 30,
		2017				2016
OPERATING ACTIVITIES
Cash flows used in operating activities
Net loss		$	(33,098	)		$	(95,943	)
Adjustment to reconcile net loss to net cash used by operating activities:
Non-cash interest expense			-				2,493
Share-based payment			-				8,000
Changes in operating assets and liabilities:
Accounts payable			(2,158	)			7,456
Prepaid expenses			8,005				(4,495	)
Net cashed used in operating activities			(27,251	)			(82,489	)
INVESTING ACTIVITIES
Acquisition of mineral property interest			(15,000	)			-
Net cash used by investing activities			(15,000	)			-
FINANCING ACTIVITIES
Common stock			-				375,000
Advances from / (repayment to) shareholders			(5,000	)			32,907
Net cash provided by (used in) financing activities			(5,000	)			407,907
Net increase (decrease) in cash			(47,251	)			325,418
Cash, at beginning			51,789				39,027
Cash, at end		$	4,538			$	364,445
Supplemental cash flow information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
Significant non-cash transactions:
Common stock issued for corporate name		$	-			$	8,000

 

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

 

 

NEVADA CANYON GOLD CORP.

Notes to the Interim Financial Statements

For the three and six months ended June 30, 2017 and 2016

(Unaudited)

 

NOTE 1 - NATURE OF BUSINESS

 

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

 

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

 

Going Concern

 

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

 

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

 

NOTE 2 - BASIS OF PRESENTATION

 

The unaudited interim financial statements of the Company have been prepared in accordance with US GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The unaudited interim financial statements should be read in conjunction with those financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

 

Recent Accounting Pronouncements

 

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

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Amounts due to related parties at June 30, 2017 and December 31, 2016:

 

		June 30, 2017				December 31, 2016
Advances due to the Chief Executive Officer (“CEO”) (a)		$	51,000			$	51,000
Advances due to a company controlled by the CEO			-				5,000
Advances due to a director(a)			21,000				21,000
Advances due to a major shareholder(a)			21,000				21,000
Related party advances		$	93,000			$	98,000

 

(a) These advances are non-interest bearing, unsecured and due on demand.

 

 

NOTE 4 – MINERAL PROPERTY INTERESTS

 

Lapon Canyon Gold Property

 

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

 

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

 

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

 

As of June 30, 2017, the Company’s interest in the Property was 30%, prorated based on the amount of Eligible Expenses the Company incurred as of that date (Note 7).

 

During the six-month period ended June 30, 2017, the Company incurred $29,292 in Eligible Expenses (2016 – $50,098) on the Lapon Canyon claims of which $29,292 represented exploration expenses (2016 – $39,124).

 

Garfield Flats Project

 

On June 7, 2017, the Company entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC (the “Vendor”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of 12 claims totaling 240 acres. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

 

In order to retain the rights to the exploration lease, the Company is required to make the following minimum annual payments:

 

		Minimum Payment
Upon execution of the option agreement (the “Effective Date”)(paid)		$	15,000
First anniversary of the Effective Date		$	15,000
Second and third anniversaries of the Effective Date		$	20,000
Fourth and fifth anniversaries of the Effective Date		$	25,000
Sixth and each succeeding anniversary of the Effective Date in perpetuity		$	40,000

 

In addition to the minimum annual payments, the Company agreed to pay the Vendor a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

 

At any time during the term of the Garfield Agreement the Company has a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by the Company to the Vendor, cannot be applied or credited against the Purchase Price, however, once the Company exercises its option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

 

 

NOTE 5 – CONSULTING REVENUE

 

During the six-month period ended June 30, 2017, the Company provided consulting services to Walker River Resources Corp. in the amount of $15,000.

 

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

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

 

On April 28, 2016, the Company split its common stock on a 10:1 basis. The stock split did not affect the par value of the Company’s common stock. As a result, the stated capital on the Company’s balance sheet attributable to the Company’s common stock was increased proportionately based on the stock split ratio, and the additional paid-in capital account was credited with the amount by which the stated capital was increased. All shares and per share amounts have been retroactively restated to account for the split.

 

During the six-month period ended June 30, 2017, the Company did not have any transactions that resulted in issuance of its common stock, or warrants or options to acquire its common stock.

 

NOTE 7 – SUBSEQUENT EVENTS

 

On July 5, 2017, the Company entered into an option purchase agreement (the “Second Option Agreement”) with WRR on the Lapon Canyon Project. Under the terms of the Second Option Agreement WRR agreed to buy back the Company’s 30% interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares. Each warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the warrants contain a provision which prevents the Company to exercise any warrants which would result in the Company owning 10% or more of the issued and outstanding shares of WRR. Closing of the Second Option Agreement was subject to the acceptance of the TSX Venture Exchange, which was received on July 17, 2017. All securities issued pursuant to the Second Option Agreement are subject to a hold period expiring on November 20, 2017.

 

On August 2, 2017, the Company entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to acquire rights to the Lazy Claims, consisting of three claims (the “Lazy Claims Property”). The term of the Lazy Claims Agreement is ten years, and is subject to extension for additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. The Company agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, the Company will not be required to pay a $2,000 annual minimum payment.

 

 

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

 

Forward Looking Statements

 

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

 

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

 

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

 

	●	the risks of an exploration stage company;
	●	management’s plans, objectives and budgets for its future operations and future economic performance;
	●	capital budget and future capital requirements;
	●	meeting future capital needs;
	●	our dependence on management and the need to recruit additional personnel;
	●	limited trading for our common stock;
	●	the level of future expenditures;
	●	impact of recent accounting pronouncements;
	●	the outcome of regulatory and litigation matters; and
	●	the assumptions described in this report underlying such forward-looking statements.

 

Actual results and developments may materially differ from those expressed in, or implied by, such statements due to a number of factors, including:

 

	●	those described in the context of such forward-looking statements;
	●	future product development and marketing costs;
	●	the markets of our domestic operations;
	●	the impact of competitive products and pricing;
	●	the political, social and economic climate in which we conduct operations; and
	●	the risk factors described in other documents and reports filed with the Securities and Exchange Commission, including our Registration Statement on Form S-1/A (SEC File No. 333-196075).

 

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

 

 

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

 

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

 

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three and six months ended June 30, 2017 and 2016. You should refer to the Financial Statements and related Notes in conjunction with this discussion.

 

General

 

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

 

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

 

As of June 30, 2017, our interest in the Property was 30%, prorated based on the amount of eligible expenditures we’ve incurred as of that date.

 

On July 5, 2017, we entered into an option purchase agreement (the “Second Option Agreement”) with WRR on the Lapon Canyon Project. Under the terms of the Second Option Agreement WRR agreed to buy back our interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares. Each warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the warrants contain a provision which prevents us from exercising any warrants which would result in us owning 10% or more of the issued and outstanding shares of WRR. Closing of the Second Option Agreement was subject to the acceptance of the TSX Venture Exchange, which was received on July 17, 2017. All securities issued pursuant to the Second Option Agreement are subject to a hold period expiring on November 20, 2017.

 

On June 7, 2017, we entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC ( “Goodsprings”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of 12 claims totaling 240 acres located in sections 27 and 28 of T 7 N, R 32 E, Mineral County, Nevada about 18 miles southeast of the town of Hawthorne. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

 

In order to retain the rights to the exploration lease, we are required to make the following minimum annual payments:

 

		Minimum Payment
Upon execution of the option agreement (the “Effective Date”)(paid)		$	15,000
First anniversary of the Effective Date		$	15,000
Second and third anniversaries of the Effective Date		$	20,000
Fourth and fifth anniversaries of the Effective Date		$	25,000
Sixth and each succeeding anniversary of the Effective Date in perpetuity		$	40,000

 

In addition to the minimum annual payments, we agreed to pay Goodsprings a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

 

 

At any time during the term of the Agreement we have a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by us to Goodsprings, cannot be applied or credited against the Purchase Price, however, once we exercise our option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

 

On August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to acquire rights to the Lazy Claims, consisting of three claims totaling 60 acres and located in Mineral County, Nevada about 18 miles southeast of the town of Hawthorne (the “Lazy Claims Property”). The term of the Lazy Claims Agreement is ten years, and is subject to extension for additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment.

 

Critical Accounting Policies and Estimates

 

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

 

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

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited interim financial statements for the three and six months ended June 30, 2017 and 2016, together with notes thereto, which are included in this Quarterly Report on Form 10-Q, as well as our most recent audited financial statements on Form 10-K for the year ended December 31, 2016.

 

 

Results of Operations

 

Three and six months ended June 30, 2017 compared to the three and six months ended June 30, 2016:

 

		Three months ended June 30,								Changes between the				Six months ended June 30,								Changes between the
		2017				2016				periods				2017				2016				periods
Revenue		$	15,000			$	-			$	15,000			$	15,000			$	-			$	15,000
Operating expenses
Exploration expenses			9,284				14,171				(4,887	)			29,292				39,124				(9,832	)
General and administrative expenses			5,885				11,133				(5,248	)			10,830				22,597				(11,767	)
Professional fees			1,500				23,677				(22,177	)			4,000				26,177				(22,177	)
Transfer agent and filing fees			1,875				3,326				(1,451	)			3,976				5,552				(1,576	)
Total operating expenses			(18,544	)			(52,307	)			(33,763	)			(48,098	)			(93,450	)			(45,352	)
Other items
Interest expense			-				(1,260	)			(1,260	)			-				(2,493	)			(2,493	)
Net and comprehensive loss		$	(3,544	)		$	(53,567	)		$	(50,023	)		$	(33,098	)		$	(95,943	)		$	(62,845	)

 

Revenues. During the three and six months ended June 30, 2017, we recorded $15,000 in revenue from consulting services we’ve provided to WRR. We did not have similar revenues during the three and six months ended June 30, 2016. Due to the exploration rather than the production nature of our business, we do not expect to have significant operating revenue in the foreseeable future.

 

Operating expenses. Our operating expenses include exploration expenses, general and administrative expenses, professional fees and transfer agent and filing fees. During the three-month period ended June 30, 2017, our operating expenses decreased by $33,763, or 65%, to $18,544 for the three months then ended, compared to $52,307 for the comparable period in 2016. This change was mainly associated with reduced professional fees as well as exploration expenses, as the main part of the drilling program we commenced on the Lapon Canyon claims (the “Exploration Program”), which was required under our Agreement with WRR to earn a 50% interest in a joint venture, was completed in our Fiscal 2016.

 

During the six-month period ended June 30, 2017, our operating expenses decreased by $45,352, or 49%, to $48,098 for the six months ended June 30, 2017, as compared to $93,450 for the comparable period in 2016. This change was associated with reduced exploration operations on the Lapon Property, as the main part of the drilling program on the Lapon Canyon claims (the “Exploration Program”), which was required under our Agreement with WRR to earn a 50% interest in a joint venture, was completed in our Fiscal 2016. During the six-month period ended June 30, 2017, we recorded $29,292 in exploration expenses directly associated with the Exploration Program, as compared with $39,124 we spent during the six-month period ended June 30, 2016. Our general and administrative expenses decreased by $11,767, or 52%, to $10,830 for the six months ended June 30, 2017, compared with $22,597 for the six-month period ended June 30, 2016. The greater general and administrative expenses during the comparable period were attributable to the fair value of 800,000 common shares we issued to Nevada Canyon Gold Corporation, a Nevada privately held corporation, with the President and CEO in common (“NCG”), which were valued at $8,000. The shares were issued to purchase the intangible assets of NCG which included its corporate name, domain name and all related content. In addition to the above, our professional fees decreased by $22,177 to $4,000 we incurred during the six-month period ended June 30, 2017, as compared to $26,177 we incurred during the comparable period in 2016. Greater professional fees in our Fiscal 2016 were mainly associated with legal and audit fees which increased in parallel with increased business activity.

 

Net loss. Our net loss decreased by $50,023, or 93%, to $3,544 for the three months ended June 30, 2017, compared to $53,567 for the comparable period in 2016.

 

Our net loss for the six months ended June 30, 2017 decreased by $62,845, or 66%, to $33,098, compared to $95,943 for the comparable period in 2016.

 

These decreases were primarily attributable to the decreases in operating expenses discussed above, which were further augmented by consulting revenue we recorded in the second quarter of our Fiscal. In addition, absence of interest-bearing liabilities also contributed to reduction of our net loss during the three and six months ended June 30, 2017.

 

 

Liquidity and Capital Resources

 

		June 30, 2017				December 31, 2016
Current assets		$	11,541			$	66,797
Current liabilities			99,042				106,200
Working capital deficit		$	(87,501	)		$	(39,403	)

 

As of June 30, 2017, we had a cash balance of $4,538, and working capital deficit of $87,501 with cash flows used in operations totaling $27,251 for the period then ended. During the six-month period ended June 30, 2017, our operations were funded with $15,000 we received on account of our consulting services provided to WRR, and with proceeds from a private placement for gross proceeds of $375,000, which we closed in the second quarter of our Fiscal 2016.

 

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the six-month period ended June 30, 2017. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under the advances payable, or to support our exploration program. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources.

 

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

 

Cash Flow

 

		Six Months Ended June 30,
		2017				2016
Cash flows used in operating activities		$	(27,251	)		$	(82,489	)
Cash flows used in investing activities			(15,000	)			-
Cash flows provided by (used in) financing activities			(5,000	)			407,907
Net increase (decrease) in cash during the period		$	(47,251	)		$	325,418

 

Net cash used in operating activities: Our net cash used in operating activities decreased by $55,238, or 67%, to $27,251 for the six months ended June 30, 2017, compared with $82,489 for the comparable period in 2016. During the six months ended June 30, 2017, we used $33,098 to cover our cash operating costs and $2,158 to decrease amounts payable to our vendors. These uses of cash were offset by $8,005 decrease in our prepaid expenses.

 

During the six months ended June 30, 2016, our net cash used in operating activities increased by $35,099, or 74%, to $82,489, compared with $47,390 for the comparable period in 2015. We used $85,450 to cover our cash operating costs, and $4,495 to increase our prepaid expenses. These uses of cash were offset by increase in our accounts payable of $7,456.

 

Certain non-cash transactions: During the six months ended June 30, 2016, our operating costs included $2,493 in accrued interest on $100,000 note payable we issued to an arms-length party, as well as $8,000 in share-based payment we recorded on issuance of 800,000 common shares to NCG in exchange for its intangible assets, including its corporate name, domain name and all related content. We did not have any non-cash transactions during the six-month period ended June 30, 2017.

 

Net cash provided by (used in) financing activities: Our net cash provided by financing activities decreased by $412,907, or 101%. During the six months ended June 30, 2017, we repaid $5,000 in advances we received from our CEO and President during our Fiscal 2016.

 

During the six months ended June 30, 2016, our net cash provided by financing activities increased by $399,407, or 4,699%, to $407,907 as compared with $8,500 for the comparable period in 2015. We received $375,000 in gross proceeds from a private placement for 3,750,000 shares of our common stock at $0.10 per share, which we closed on June 21, 2016. We received $30,000 advance from our CEO and President free of interest and payable on demand. In addition, our CEO and a director made certain payments on behalf of the Company, which payments amounted to $2,907.

 

Net cash used in investing activities: During the six months ended June 30, 2017, we paid $15,000 as an initial payment to acquire Garfield Property pursuant to our exploration lease and option to purchase agreement with Goodsprings Development LLC.

 

During the six months ended June 30, 2016, we did not have any investing transactions that would have effected our cash flows.

 

 

Going Concern

 

At June 30, 2017, we had a working capital deficit of $87,501 and cash on hand of $4,538, which is not sufficient enough to carry out our current plan of operation, however we are in the process of trying to procure funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders' investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.

 

Income Tax Benefit

 

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

 

Impact of Inflation

 

We believe that inflation has had a negligible effect on operations over the past fiscal quarter.

 

Capital Expenditures

 

The Company expended no amounts on capital expenditures for the six months ended June 30, 2017.

 

Unproved Mineral Properties

 

As of the date of this quarterly report on Form 10-Q, we hold interest in the following properties:

 

Name		Number of Claims				Total Size (Acres)
Garfield Flats Project			12				240
Lazy Claims Property			3				60
Total			15				300

 

Garfield Flats Project

 

On June 7, 2017, we entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC (“Goodsprings”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of 12 claims totaling 240 acres located in sections 27 and 28 of T 7 N, R 32 E, Mineral County, Nevada about 18 miles southeast of the town of Hawthorne. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

 

In order to retain the rights to the exploration lease, we are required to make the following minimum annual payments:

 

		Minimum Payment
Upon execution of the option agreement (the “Effective Date”)(paid)		$	15,000
First anniversary of the Effective Date		$	15,000
Second and third anniversaries of the Effective Date		$	20,000
Fourth and fifth anniversaries of the Effective Date		$	25,000
Sixth and each succeeding anniversary of the Effective Date in perpetuity		$	40,000

 

 

In addition to the minimum annual payments, we agreed to pay Goodsprings a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

 

At any time during the term of the Agreement we have a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by us to Goodsprings, cannot be applied or credited against the Purchase Price, however, once we exercise our option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

 

Lazy Claims Property

 

On August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to acquire rights to the Lazy Claims, consisting of three claims totaling 60 acres and located in Mineral County, Nevada about 18 miles southeast of the town of Hawthorne (the “Lazy Claims Property”).

 

The term of the Lazy Claims Agreement is ten years, and is subject to extension for an additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment.

 

Lapon Canyon Property

 

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

 

The Agreement did not grant us an interest in or to the Property, or any equity interest in WRR, but rather, granted us the right to earn up to an undivided 50% interest in the Property by incurring $500,000 (over a two-year period) in eligible exploration and other expenses required to carry out an Exploration Program established and operated by WRR on the Property (the “Eligible Expenses”). As of October 15, 2016, we have incurred required $250,000 in Eligible Expenses, and earned the 25% interest to the Property. As at June 30, 2017, our interest in the Property had increased to a 30%.

 

On July 5, 2017, we entered into an option purchase agreement (the “Second Option Agreement”) with WRR on the Property. Under the terms of the Second Option Agreement WRR agreed to buy back our interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares. Each warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the warrants contain a provision which prevents us from exercising any warrants which would result in us owning 10% or more of the issued and outstanding shares of WRR. The above securities were issued on July 19, 2017, upon acceptance of the Second Option Agreement by the TSX Venture Exchange. All securities issued pursuant to the Second Option Agreement are subject to a hold period expiring on November 20, 2017.

 

Off-Balance Sheet Arrangements

 

None.

 

Use of Estimates

 

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

 

We evaluate impairment of our long-lived assets by applying the provisions of SFAS No. 144. In applying those provisions, we have not recognized any impairment charge on our long-lived assets during the six months ended June 30, 2017.

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

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

 

Item 4. Controls and Procedures

 

(a)	Evaluation of Disclosure Controls and Procedures

 

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

 

(b)	Changes in Internal Controls over Financial Reporting

 

During the six-month period ended June 30, 2017, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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

 

Inherent Limitations of Internal Controls

 

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

 

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

 

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

 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

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

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

(a)

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

 

Exhibit
Number		Description
10.01.1		Definitive Agreement, dated December 17, 2015 (1)
10.01.2		Exploration and Option Agreement, dated September 15, 2015 (1)
10.02		Exploration Lease and Option to Purchase Agreement, dated June 7, 2017 (2)
10.03		Option Purchase Agreement, dated July 5, 2017 (3)
10.04		Exploration Lease Agreement, dated August 2, 2017 (4)
31.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase.
101.DEF		XBRL Taxonomy Extension Definition Linkbase.
101.LAB		XBRL Taxonomy Extension Label Linkbase.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

 

	(1)	Incorporated by reference herein from the Form 8-K filed by the Company on December 22, 2015.
	(2)	Incorporated by reference herein from the Form 8-K filed by the Company on June 8, 2017.
	(3)	Incorporated by reference herein from the Form 8-K filed by the Company on July 7, 2017.
	(4)	Incorporated by reference herein from the Form 8-K filed by the Company on August 7, 2017.
	*	Filed herewith.

 

 

SignatureS

 

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

 

	NEVADA CANYON GOLD CORP.
August 14, 2017	/s/ Jeffrey A. Cocks
	Jeffrey A. Cocks
	Chairman and Chief Executive Officer (Principal Executive
	Officer) and Chief Financial Officer (Principal Accounting and
	Financial Officer)